Who’s saving and who’s paying?
Since the Reform in December 2014, property buyers have been enjoying the reduced Stamp Duty Land Tax (SDLT), with average savings just over £4,500, according to Halifax. Whilst the new system is still very much “working out” for most, with property prices rising, more houses are falling subject to higher rates of SDLT, particularly in London.
Average savings on SDLT – £4,500
The average house price in England & Wales is just under £275,000, according to December 2015 figures, Halifax reports. SDLT under the old taxing system would have resulted in property buyers having to fork out over £8,200. Under the new regime, their tax liability is just under £3,700, resulting in savings of around £4,500.
What would you do with an extra £4,500?
Despite good savings for individuals across the country, collectively in 14-15, SDLT raised £7.5billion, over £70 billion (16%) more than in 2007-2008, during the last property market boom.
The winners and the losers
Expensive homes take a hit on SDLT Reform
With house prices rising though, so are SDLT costs, as more purchases fall into the higher brackets.
The property price where the old system is more cost-beneficial for the purchaser than the new one, is £938,000, which, in areas like London, is becoming more part of the norm.
Despite only accounting for 13% of property purchases, last year, London contributed 40% of the nation’s SDLT, that’s £3 billion! It’s a 60% increase from 2007-2008 figures of £1.9 billion.
Another group of property buyers are losing out when it comes to SDLT are prospect buy-to-let investors, as an additional 3% will be added, from April 2016, to all buy-to-let property investments and second home transactions.
Read more – Can you avoid the extra SDLT?
First-time buyers benefit at the bottom of the scale
Whilst the tax levied does affect those buying expensive homes, there are also those home-owners that are significantly benefiting from the Reform, including 32% of first time buyers, on average, who experienced no SDLT bill at all, as their property price was below the starting limit of £125,000.