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Stamp Duty Changes

As of midnight December 4th, chancellor George Osborne made changes to the stamp duty land tax, which means a reduction in cost for 98% of us, only the highest value property purchasers will pay more.

The old system meant you paid a fixed percentage on the whole amount, whereas the new system is tapered;

  • No Tax on the first £125,000- 2% £125,001 - £250,000
  • 5% £250,001 - £925,000
  • 10% £925,001 - £1.5million
  • 12% on any amount over £1.5million

With the old system someone buying a property for £200,000 would have paid 1% on the whole amount (£2,000), with the new system you pay no tax on the first £125,000 and 2% on the remaining £75,000 (£1500) meaning a saving of £500. Generally it's good news for the majority and it will certainly help first time buyers get on the property ladder, but how does it effect us locally.

"It will certainly help first time buyers get on the property ladder"

The estimated terraced family house now costing £825,000 in Hackney, under the old rules you would have to pay £33,000 (4% on the whole amount) under the new legislation it works out to be £30,250, a saving of £2,750. However, for someone purchasing a Shoreditch penthouse at £2million there would be an increase of £52,750 (£100,000 under the old system and £152,750 under the new system). So it isn't good news for everyone and may have an impact at the upper end of the market

It has come out of the blue, and there are some suggestions it may be to dampen the hype surrounding the possible 'mansion tax' which may come to fruition. Subject to who wins the next general election but whatever the reason/thinking it's a welcome surprise for the majority and it's certainly helped many of the people currently purchasing through ourselves. It will be interesting to see what impact the changes have on the housing market, so watch this space as we keep you posted!

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