You may be wondering how the recent changes to Stamp Duty will affect you and your property. Robert Barr, Sales Manager at Kerr & Co, examines the recent changes to Stamp Duty, and explains how they could impact you
One of the most significant changes to Stamp Duty Land Tax (SDLT) for several decades has been implemented by the current chancellor. Under the new rules, SDLT has effectively been lowered for the majority of buyers nationally, and allegedly some 98% of transactions will benefit from a lower tax bill.
However, those paying £1.25 million or more will face a progressively larger bill. Recent research by The Organisation for Economic Co-operation and Development has shown we already pay the highest tax on property in the developed world (residential and commercial property tax accounting for £1 in every £8 paid to the tax man). The recent changes reduce this burden by some £750 million per annum based on current values. This has hopefully removed the requirement for the ‘mansion tax’ by front loading the duty rather than having an annual charge on a hypothetical value which makes the tax a fairer system.
The previous system also distorted the market at the threshold points, meaning properties were priced either just beneath the banding or significantly over it. These distortions to the market will now become a distant memory.
As with the previous change to SDLT, when the new threshold of properties over £2 million attracted a flat rate 7% charge, there was a six month period of acclimatisation which we fully expect to happen with the London house market in light of the new system. Conversely we expect the flat market to be far more active as the new lower tax rates attract renew interest from buyers. Overall once these changes have been digested, the market will continue as normal with predicted growth of between 5% and 7% for 2015.
020 8762 0522; kerrandco.com