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How Will The New Stamp Duty Affect You?

Posted on Tuesday, 09 December 2014 07:06PM by Artful Lodger
Property buyers paused their online home searches on Wednesday, turning their attention to Osborn and his Autumn Statement, waiting with baited breath to hear of the stamp duty reforms. In it, he claimed 98% of buyers will pay less; this is expected to encourage a surge in the traditional post Christmas property shift.

So how does the new stamp duty system work, and how will it affect the average house buyer in the UK?

Property costing: 

£0-£125,000 will pay 0% rate of purchase

£125,001-£250 will pay 2%

£250,001-£925,000 will pay 5%

£925,001- £1.5M will pay 10%

£1.5m and over will pay 12%

An averagely priced home of £180,000, there will be no stamp duty to pay on the first £125,000. There will then be a 2% stamp duty charge on the remaining £55,000, costing a total of £1100. This is a saving of £700 when compared with the old system. More information and calculators are available online.

The new system has been forecast by property experts to benefit the average house buyer in stamp duty savings. However, some experts have warned that it could lead to an increase in property prices for the majority of homeowners, as the increased number of people looking for a home drive up the market.

Who will be hit hardest?
Speculators have suggested that those who really lose out from the deal, are the wealthiest among our society; as the hefty 10%+ stamp duty for property nearing the million pound mark would indicate.

Whereas previously, stamp duty on a property of £1,000,000 would have set the buyer back £40,000, the new rate will cost £43,750, effectively an overall stamp duty rate of 4.38%.

In spite of some critiques suggesting this could cause high end property stagnation, the majority of experts argue that there is likely to be little change in the buoyancy of the upper end of the market. Agents and experts alike appear to be in overall agreement that those who can afford to buy houses for nearing a million pounds and more can stand the increased rates.

Ultimately, property experts have predicted that if any alterations are to be made in the marketing of the more expensive properties on the market, it would be found in the price dipping below £1 million for those being marketed in the region to attract a wider spectrum of buyers.

For the average house buyer, the future seems bright; it is anticipated that savings on stamp duty will encourage more movers in the New Year. For those who are already in the process of buying, securing your property before Christmas will provide the benefit of reduced rates without the anticipated increased prices induced by the new duty.