The Impact of Increasing House Prices and Stamp Duty

What is Stamp Duty?

Stamp Duty is the tax charged by the Government when you buy a home of more than £125,000.

Why do we have to pay it ?

When you buy a property the change in land ownership has to be legally registered at the Land Registry. This process requires a certificate from the HMRC – which they will only issue on receipt of the Stamp Duty due on the purchase of the property.

The transfer of funds to pay the Stamp Duty will be managed for you by your solicitor.

How much is Stamp Duty ?

For homes over £125,000 there is no Stamp Duty to pay on the first £125,000, then the following rates apply:

What if I'm a first time buyer ?

If you’re a first time buyer, purchasing a home up to £500,000, the following rates apply:

What if I'm an investor or own more than one property ?

If you are buying an investment property or an additional home, the following rates will apply to your purchase:

Hundreds of thousands of properties have been forced into higher stamp duty categories.

According to fresh estimates from Zoopla, a dramatic surge in housing prices has pushed more than four million residences into higher stamp duty or similar tax brackets during the coronavirus outbreak.

Since March 2020, 4.3 million houses in the UK have been moved into a higher tax rate, putting prospective buyers at risk of paying greater taxes when they move.

In Wales, the land transaction tax (LTT) has replaced stamp duty, and property acquisitions in Scotland are subject to the land and buildings transaction tax (LBTT).

According to Zoopla data, the average price of a UK home has risen by nearly £29,000 since March 2020, to £249,700.

As a result, almost 1.5 million more properties in the UK are now liable to stamp duty – or its equivalent levy – than they were two years ago.

 

 

According to the property website, 3.5 million homes in England and Northern Ireland have moved up to a higher stamp duty level.

In Scotland and Wales, another 815,000 dwellings have crossed the property tax threshold.

Because of the surge in property prices, first-time buyers are now spending an average of £225,000 for their first house, up £27,000 from two years ago.

According to the property website, 3.5 million homes in England and Northern Ireland have moved up to a higher stamp duty level.

In Scotland and Wales, another 815,000 dwellings have crossed the property tax threshold.

Because of the surge in property prices, first-time buyers are now spending an average of £225,000 for their first house, up £27,000 from two years ago.

“Buyer demand has been very robust ever since the end of the first lockdown in 2020, and the start of this year has been no exception,” said Grainne Gilmore, Zoopla’s head of research. This demand, along with limited supply, has put upward pressure on prices, with the average property being worth £29,000 more than it was in March 2020.

“As a result, millions more homes have been pushed into higher stamp duty categories, resulting in an additional cost to buyers if they come to market.”

“While homeowners who move will profit from increasing property values when they sell, new entrants to the market will have to find additional financing to support a relocation – meaning first-time buyers’ reliance on the ‘Bank of Mum and Dad’ is likely to rise.” It also emphasises the necessity of first-time buyers being able to get mortgages with lower deposit requirements if they meet all other criteria for a mortgage loan.

“However, there is good news for some buyers because we have identified areas where the supply of homes for sale has increased significantly in the last month, giving potential purchasers more choice in areas such as Pendle in the North West, Elmbridge in the South East, and the new city of Southend-on-Sea on the East England coast.”

“While supply is currently building, demand in the country market remains robust,” Chris Druce, senior research analyst at Knight Frank, stated in response to the latest Zoopla data. The spring market promises a window of opportunity for both buyers and sellers as headwinds build.

“In the rural and semi-rural market, supply ‘hotspots’ include Stow on the Wold in the Cotswolds, where new instructions were up 82 percent in the four weeks to April 27 compared to the five-year average; Hazelmere [up 61 percent]; Winchester [up 54 percent]; Oxford [up 47 percent] and North Surrey’s popular commuter town Esher [up 45 percent].”

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