Although many of the announcements in the recent mini-Budget last month have now been scrapped, one survivor of the former Chancellor’s statement was a major change to the thresholds for Stamp Duty Land Tax (SDLT).
Here, Nicola Tubbs, a Director with Palmers and Head of our Residential Property department, explains how the latest changes will affect home buyers:
First-time buyers
You can claim a discount on SDLT if the property is your first home. This means you’ll pay:
- No SDLT on properties up to £425,000 – up from £300,000
- 5 per cent SDLT on the amount between £425,001 to £625,000
If the property price exceeds £625,000, you cannot claim SDLT.
As an example, if you are a first-time buyer and purchase a property for £500,000, the SDLT you owe will be calculated as:
- 0% on the first £425,000 = £0
- 5% on the remaining £75,000 = £3,750
- total SDLT = £3,750
Crucially, where homes are being purchased jointly, both parties must be first-time buyers to qualify for relief.
Home movers
Home movers do not benefit from the same levels of relief as first-time buyers but will still see savings of up to £2,500.
The new tariffs for existing home owners are:
Properties up to the value of 250,000 – no SDLT is now payable
From 250,001 up to £925,000 5 per cent
From £925,001 to £1.5million 10 per cent, with any amount over £1.5million taxed at 12 per cent.
A home mover buying a property valued at £200,000 will now pay no SDLT but would previously have paid £1,500.
Buying a property at £400,000 would see the SDLT charge fall from £10,000 to £7,500 – a saving of £2,500.
Buyers of properties worth £600,000 will benefit from the same saving with the SDLT charge falling from £20,000 to £17,500.
Second home buyers, landlords and investors
Anyone who owns more than one property will continue to need to pay an additional three per cent on the total purchase price of the property, but they will still benefit from the changes to the SDLT thresholds.
But what about mortgages?
The ongoing debate over the entire package of measures has led to circumstances where many lenders have taken products off the market. At the same time, there is a strong expectation that the Bank of England’s Monetary Policy Committee may further raise its Base Rate considerably at its next scheduled meeting in early November.
People who already have mortgage offers are unlikely to see them withdrawn, but those who have not yet secured a mortgage may see the SDLT savings eaten away by the significantly increased cost of borrowing.
Despite this, the property market remains relatively buoyant and Palmers’ professional conveyancing staff are here to offer practical and clear advice on the legal aspects and the often-confusing procedures which need to be negotiated from the point of offer to moving house.
Our conveyancers have dedicated support staff who will provide general updates on the progress of your transactions and, sometimes even more importantly, a sympathetic ear when the frustrations of moving house require it!
We are on the panels of the major mortgage lenders, enabling savings to be made in the majority of purchases and re-mortgages.
For more information about our conveyancing services, please get in touch with us.