The 3rd of December 2014 was a key date for the property industry as George Osborne abolished the ‘slab’ Stamp Duty Land Tax (SDLT) structure and instead announced a new ‘tiered’ system. At KFH, we oversaw the exchange of a number of properties as buyers sought to beat the midnight deadline and in total, £93,891 was saved on properties that exchanged before 12pm that evening. Looking at our December sales data, 23% of all December exchanges took place on both the 5th and 12th of December (the two Friday’s following the announcement when the majority of solicitors arrange exchange of contracts). This data backs up what we saw in branches, when many customers asked for exchanges to be put back in order to benefit from the cash windfall.
Analysis of all our transactions undertaken in 2014 reveals that customers benefiting from the new rules would have saved an average amount of £2,485, while those adversely affected will be out of pocket by an average of £11,277. Interestingly, 90% of our customers benefited from the new rules with just just 10% adversely affected.
Buyers of a property priced at £464,936 (the average property price in London according to the Land Registry), will find that they are now £597 better off under the new rules, needing to pay £13,246 in SDLT, rather than the £13,843 required under the old system. The actual tipping point, where it becomes more expensive to now buy a property than it previously was, is £937,500. At this level you will pay £37,500 in SDLT.
Robert McLaughlin, Regional Sales Director at KFH, comments: “The majority of our customers benefited greatly from the recent Stamp Duty restructure and for many, the windfall funded other transactional aspects including solicitor’s fees, mortgage fees and movers. The changes have been well received with both buyers and sellers feeling far more positive about making a move now that they are not only paying less tax but are also benefiting from low interest rates and a plethora of mortgage products. We’ve seen many first time buyers re-enter the sales market along with investors and expect activity to remain high as we enter the busy spring season.”
To calculate the amount of SDLT owed on a property you are buying, you can visit the Government's calculator here: http://www.hmrc.gov.uk/tools/sdlt/leases.htm