Since our last blog about Stamp Duty in February, the changes to the bands announced in December have had a number of knock-on effects to the market.
Robert Gardner, Nationwide's Chief Economist, said he has observed that, “stamp duty changes have reduced bunching at key price points.”
He comments further -
“Significant changes to Stamp Duty Land Tax (SDLT) were introduced in the Autumn Statement in December last year. In particular, there was a shift to purchasers paying the marginal tax rate on the relevant elements of the purchase price as the old ‘slab structure’ was abolished.
“The slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds. Under that system, paying £1 more would result in significant additional stamp duty being due (for example, paying £1 over the £250,000 or the £500,000 threshold used to trigger an additional £5,000 of SDLT).
“Even though the change to SDLT only came into effect six months ago, the impact on the pattern of transactions is already evident, with much less bunching of transactions around the £125,000, £500,000 and in particular the £250,000 price points.
“Moreover, based on the first six months of transactions data from the Land Registry, nearly 235,000 purchasers in England and Wales have paid less tax under the new regime, with an average benefit of c£1,800.
“The benefits are greatest in the South of England where average house prices are higher. We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England.
“However, we estimate that around 5,000 (2%) of purchasers paid more (two thirds of whom were in London), with an average of £28,000 more tax being paid compared with the old system.
“On balance (considering the net effect of those paying more and those paying less), we estimate that the changes have resulted in around £275m less tax being paid than would have been the case under the old stamp duty regime.”
To help you calculate what you might need to pay in Stamp Duty, you can find our Stamp Duty Calculator here. If you are concerned about the changes or if you are looking to purchase a property in the coming months, please contact Nigel Sellers on +44 (0) 1962 793100 or email firstname.lastname@example.org