Property clumping at Stamp duty breaks. Fact?
April 29th, 2010
Another fine mess of stamp duty rate changes in the last budget means that buyers are going feel even more pain at the rate change pinch points. The current government will be adding another pinch point at £1M from April next year. Over 48% of property in Kensington is worth over £1M! Lets look at the difference that a £1 makes to a buyers Stamp duty liability.
PURCHASE (%) PAYMENT
£250,000 (1%) = £2,500
£250,001 (3%) = £7,500
£500,000 (3%) = £15,000
£500,001 (4%) = £20,000
£1,000,000 (4%) = £40,000
£1,000,001 (5%) = £50,000 (from 6th April 2011)
Sellers can feel no sense of satisfaction either as this causes properties for sale to clump together at around/ just below the break points. This is easily demonstrated – There are about 480 vendors selling [on Globrix] at between £499,000 – £500,000. Is not one of them convinced their property is worth a penny more than £500,000? My bet is that the current number of 140 properties for sale at £999,000 – £1m will at least double from April 2011 when the 5% payment applies above £1m.
Labels: buying property, SDLT, Stamp Duty
A good picture of the ‘problem’ you’ve given there Stephen in a nicely laid out article – many thanks.
One useful tip which lessens the impact of the clumping somewhat, but more importantly delivers massive SDLT savings for buyers is to seek out a reputable SDLT mitigation scheme provider, which can in some cases reduce the SDLT payable by as much as 56.5%
There’s a handy and simple SDLT savings calculator at http://bit.ly/cgFgyc you can use to see how much can be saved at any given purchase price.
It’s crazy to think that pricing a property £1 over a certain value vastly increases the stamp duty you are likely to pay when buying a home.