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Stamp duty or to give it its full title, Stamp Duty Land Tax (“SDLT”), is an up-front tax paid on all property purchases. Following this week’s budget the Government hopes that by removing this up-front cost buying a first home will become more affordable and give the housing market a boost.
Whether the changes will achieve this aim remains to be seen. London’s Evening Standard yesterday reported that the stamp duty cut had lead a “stampede” of first time buyers to contact estate agents. In the short term at the least, the announcement has had an impact.
Very often as the saying goes the ‘devil is in the detail’ so while the changes announced will certainly have wide application, there are still a few conditions that need to be met and these are set out below.
Previously, for purchases above £125,000 SDLT has been payable at the normal rates which are as follows:
|Property or lease
premium or transfer value
|Up to £125,000
|The next £125,000 (the portion from £125,001 to £250,000)
|The next £675,000 (the portion from £250,001 to £925,000)
|The next £575,000 (the portion from £925,001 to £1.5 million)
|The remaining amount (the portion above £1.5 million)
The budget makes the following main changes in relation to SDLT:
The Government has given the following example setting out how much first time buyers will pay before and after the Budget:
|22 November Onwards
|£208,000 average first-time
buyer in the UK
|£410,000 – average
first-time buyer in London
|Stamp duty due is unchanged on purchases above £500,000
It should be noted that there will be no relief for first time buyers purchasing for above £500,000 – this means that houses purchased for £500,001 or more will pay the full amount.
It is thought that 95% of first-time buyers who currently pay stamp duty will benefit from this change and 80% of people buying their first home will pay no stamp duty at all.
The changes mean that the relief is available for transactions with an effective date, usually the date of completion, on or after 22 November 2017 and in order to be eligible for the relief you must satisfy the following main conditions:
As can be seen therefore none of these conditions are particularly onerous and the changes should therefore be a welcome relief for first time buyers across the country, and particularly so for those in the capital who will benefit more.
You can calculate your SDLT liability using the following link.
If you have any further questions in relation to SDLT and how these changes may affect you or simply want to contact us for a Conveyancing quote you can fill in our online form here or call us directly on 020 7288 4700.
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