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Changes to the existing Stamp Duty rules have been bounced around for some time now, but the rabbit that the Chancellor pulled out of the hat on the 3rd of December will have been quite a surprise to the average house buyer, who on average could look to benefit by around £4,500.
With effect from 4th December 2014, Stamp Duty on property purchases will change to a more progressive structure based on the purchase price, which the Chancellor has stated will benefit up to 98% of house purchases.
Purchase Price Band (£) Percentage Rate
Up to £125,000 0
Over 1,500,000 12
This will apply to all transactions where contracts have exchanged after 4th December 2014
Purchase price of £280,000
New rules £4000
Old rules £8400
Purchase Price £450,000
New rules £12,500
Old Rules £14,850
Purchase Price £800,000
New Rules £30,000
Old Rules £32,000
Property purchases up to £937,500 will see a saving on Stamp Duty paid, but those properties in excess of this figure will see increased costs, which will escalate quickly once the purchase price is in excess of £1.5 million.
Click on this link for a useful calculator to help with further sums:
We have experienced a significant amount of intervention by the Government through Funding for Lending and Mortgage Assist schemes which have, arguably, given more impetus to the first time buyer market.
The saving of £4281 on the ‘average house price in England and Wales’ purchase of £177,377 is not a sum to be sniffed at when many are stretched to find disposable funds during the moving process and the saving goes a long way towards funding a new kitchen or bathroom at that level of the market.
I am of the opinion that this saving in itself will be more of a catalyst to assist with the commitment to purchase a property rather than a calling for the market to be re-ignited into action.
At the higher end of the scale, only time will tell how sales above £1.5M will be affected, but I am sure it will be a disincentive to some who will feel that they have been caught out before the 2015 election.
Should you require further advice on this or any other property related matter, please do not hesitate to call any of the Agency offices where you will be directed to a member of the team who will assist.
Chris Arundel, Director and Head of Agency