Osbourne boasted that 98% of households would either benefit or be no worse off under the new rules – and looking at the average house price in the UK of roughly £275,000, buyers would indeed make a significant saving of £4,500.
New Stamp Duty Rates:
£0 – £125,000 = 0%
£125,001 – £250,000 = 2%
£250,001 – £925,000 = 5%
£925,001 – £1,500,000 = 10%
£1,500,001 and over = 12%
One point the Chancellor has failed to mention is that the new gradual Stamp Duty system bares striking similarities to the recently introduced Scottish Land Tax Reform, which also got rid of an out-dated and market-distorting slab approach in favour of a graduated system.
High-end property owners will be hit the hardest, as the new rules deliver a second blow following Labour’s proposed Mansion Tax. Whichever party gets into power come the General Election, buyers of £2million plus properties will be taking a big hit. Although £2million plus homes will be hit hardest, anyone buying a home worth more than £937,500 will also be worse off.
Now the real question is, are there any buyers of high-end properties out there who will manage to complete before midnight tonight and avoid the new tax rules? I’ve heard that estate agents can work wonders, but pulling off a sale before midnight under pressure from a suddenly distressed buyer would be miraculous.
For an unlucky buyer completing on a £2million home at 00:01am tonight, they will have lost an extra £18,000 in that one minute.
And vice versa, any buyers of a more reasonably priced £510,000 home, completing between now and midnight will lose out on £4,900 worth of savings that the new rules would afford them.
Here we have compiled the potential savings under the new system to show how much better (or worse) off you could be come tomorrow morning:
Graph compiled by The House Shop using Government Stamp Duty data
As we can see, the vast majority of properties will benefit from the new rules, although some will benefit much more than others. The real losers under the new system are buyers of high-end properties worth over £937,500, but again there is variation in by how much these buyers will lose out.
Many home-owners and first time buyers will be glad to see the old ‘slab’ rules thrown out, and the market will surely benefit from the removal of distorted ‘no-mans-lands’ just over the old thresholds. With the vast majority of buyers benefiting from the new rules, this should be a popular policy to give the Conservatives the little boost they need before next year’s General Election. On top of this, the new rules should help bring an end to the distortive impact of Stamp Duty on the property market.