Has buying a house become cheaper overnight? In some cases yes!
Announced that from midnight on 3rd December, the new rates of stamp duty will only apply to the amount of the purchase price that falls within the particular duty band, making it more like income tax.
In other words, someone buying a house for £200,000 will pay nothing on the first £125,000, and then 2% of the next £75,000, giving them a bill of £1500. Previously they would have paid 1% on the total purchase price, giving them a bill of £2,000. Therefore, properties at the higher end of the market will be liable for a higher rate of stamp duty, wheras the properties at the lower end of the market will actually pay less stamp duty.
The new rates will be as follows:
- Up to £125,000 : 0%
- £125,001 to £250,000 : 2%
- £250,001 to £925,000 : 5%
- £925,001 to £1.5m : 10%
- Above £1.5m : 12%
A recent survey suggest someone buying a family home for an average price in England and Wales will now pay £4,500 less in stamp duty. The new system will also smooth out the steps - or sudden jumps - in existing stamp duty thresholds making moving more achievable for a lot more people.