Until 1997, the stamp duty system was very simple, with a charge of 1% for all properties sold over £60,000. After 1997 the ‘slab’ system was introduced, where properties are taxed at different rates depending on their value. This created significant increases in the levels of tax charged and the value band thresholds created controversy. While this ‘slab’ system was much criticised, the shakeup of Stamp Duty Land Tax (SDLT) in December caught the property market by surprise. Replacing the old ‘slab’ system, the new rules now in place mean buyers pay stamp duty on a proportion of the property’s sale value within different thresholds rather than a percentage of the total price paid under the old regime. While the majority of properties sold over £937,500 now pay a higher rate, these account for a relatively small proportion of sales, even in London. Indeed, for the majority of London buyers, the savings on SDLT are significant. In Islington, the average property value is £664,267. Under the old SDLT regime buyers would have paid over £26,000 in stamp duty; the new system saves them almost £3,500.
The vast majority of our buyers will now have a lower stamp duty cost when purchasing their property. So far this year, 97% of properties sold by our South East London offices and 92% of the South West offices would have had lower stamp duty charges under the new regime. Even those branches which fall within our North West Central group, encompassing some of the highest priced London addresses, saw just 17% of buyers pay more stamp duty. Across our London branches, those who bought in the first three months of the year saved over £4.3 million in stamp duty compared with the total amount that would have been charged under the previous system.
NB: A higher rate of 15% applies to non-exempt properties held within company structures.