stamp duty

When you buy a house or flat that’s going to be your main home, you will pay stamp duty on everything above £125,000. If it’s a buy-to-let or second home, you pay stamp duty on any property costing more than £40,000.

 

What is Stamp Duty?

In England, Northern Ireland and Wales you’re liable to pay Stamp Duty when you buy a residential property, or a piece of land, that costs more than £125,000 (£40,000 for second homes).

 

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

 

In Scotland, when you buy a property or land you will pay a Land and Buildings Transaction Tax instead of Stamp Duty.

 

How much is Stamp Duty?

When you buy a property you’re planning to live in, you won’t pay any Stamp Duty on the first £125,000. You’ll then pay 2% on the portion up to £250,000 and 5% on the portion up to £925,000. Between that point and £1.5m, it’s 10% – then 12% on anything over £1.5m.

 

There are several rate bands for Stamp Duty.

 

For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you owe is calculated as follows:

 

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £25,000 = £1,250

Total SDLT = £3,750

 

Stamp duty for residential leasehold properties are charged differently.

 

Stamp Duty on second homes:

Buyers of additional residential properties, such as second homes and buy-to-let properties, will have to pay an extra 3% in Stamp Duty on top of current rates for each band.

 

This increased rate applies to properties bought for £40,000 or more.

It doesn’t apply to caravans, mobile homes or houseboats.

 

If you buy a new main residence but there is a delay in selling your previous main property, you’ll have to pay the higher Stamp Duty rates as you’ll now own two properties.

 

When is Stamp Duty not payable?

You’ll automatically avoid Stamp Duty if you buy a property below £125,000.

But for many homebuyers this isn’t possible.

 

There are other circumstances in which Stamp Duty is either not payable or can be reduced:

 

Slightly over rate band. If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.

Transfer of property in separation or divorce. If you’re divorcing or separating from your spouse or partner, there’s no Stamp Duty to pay if you transfer a proportion of your home value to them.

 

Transfer of deeds. If you transfer the deeds of your home to someone else either as a gift or in your will they won’t have to pay Stamp Duty on the market value of the property.

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The latest research from Connells Survey & Valuation shows that, during February, first-time-buyer activity soared to a market share of 36% – an 8% rise against February 2016.

The near zero base rate has ensured that mortgages remain more affordable than ever – with gross lending at its highest level since 2008.

First-time buyers have seized the opportunity to get on the property ladder. This group now accounts for a third of activity in the property market during February (36%) – the highest proportion of first-time buyers since July 2011 and the highest February since 2010.

John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Continued affordable mortgages have provided first-time buyers with an ideal opportunity to take their first step onto the ladder in February. Lending to aspiring homeowners continues to rise, while the base rate remains so low. For those with enough savings for a deposit, now is a great time to buy. Many are taking advantage of the opportunities on offer.”

John said: “The stamp duty surcharge has succeeded in helping first-time buyers at the expense of landlords. But this may well be temporary. Less competition for today’s first-time buyers comes at the expense of tomorrow’s. Most people rent as they save for a deposit, but the steady investment into the rental market is running dry. With limited new homes being built for the PRS, rents will soon start to rise. This will devour tenants’ disposable income which would otherwise have been saved for a deposit. The problem will be exacerbated next month as mortgage tax relief is removed, forcing more landlords to exit the market or ramp up rents.

In the Housing white paper, the Government announced plans to boost build-to-rent and institutional landlords, but it will be years before anyone can move into the accompanying new homes. Rents remained relatively stable following the influx of investment before the stamp duty surcharge but tenants could soon feel the full force of recently announced Government policies.”

However, the increase does not mean the Government has succeeded in boosting the prospects of first-time buyers long-term, says Connells Survey & Valuation. The surge from 28 per cent last February to 36 per cent this February is only marginally higher than the 10 year average.  Over the course of the last decade first-time buyers have been responsible, on average, for 35 per cent of the market. And the 36 per cent of valuations that first-time buyers represented in February 2017 pales into insignificance compared to the 41 per cent peak in February 2010.

John continues: “The rapid growth in first-time buyer activity is a recovery from a lower position, rather than a substantial improvement in market conditions. It’s important to not just look at the snapshot numbers but take into account the long-term trends. It’s still incredibly difficult to get on the property ladder. Most aspiring home owners will tell you about the Herculean challenges they face to save for a deposit. Despite all the Help to Buy programmes, first-time buyer activity is only 1 per cent higher than it has been, on average, over the last decade.

We may be in the eye of the storm in Britain’s housing market – a brief period of calm before the turbulence begins again. The base rate can’t stay on the floor forever. With Brexit approaching, economic conditions may get tougher. First-time buyers may need to board the ladder now before it’s hoisted up again.”

 

Source: http://www.propertyreporter.co.uk/property/ftbs-storm-the-property-ladder-in-february.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-197729-Campaign+-+15%2F03%2F2017+CT 

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The latest report from Halifax has shown that more first-time buyers climbed on to the property ladder in 2016 than in any year since 2007.

However, it comes at a cost as the lender revealed would-be home owners now need to raise more than £32,000 for a deposit.

Deposit sizes have more than doubled over the last decade. In 2006, the average first-time buyer deposit across the UK was £15,168. Now it is £32,321 – around 16% of the price of a typical first home.

According to the report, those buying their first property can expect to pay more than £200,000 across the UK generally and an “eye-watering” £400,000 in London. On average, in the capital, a first-time buyer’s deposit is more than £100,000, assuming they can also cover moving costs and stamp duty.

First-time buyers in London put down a 25% deposit on average in 2016, amounting to £100,445.

Halifax also revealed that during 2016, the average house price paid by first-time buyers was £205,170 – the highest on record. This average has grown by 7% over the last year, pushing it over the £200,000 mark.

In London, first-time buyers can expect to pay £402,692.

The number of first-time buyers is estimated to have reached 335,750 in 2016. This is the highest figure since 359,900 in 2007, and marks the third year in a row that the number has topped 300,000.

Halifax said the number of first-time buyers in 2016 was 75% higher than a low point in 2009, but 17% below a pre-crisis peak of 402,800 in 2006.

As the cost of housing has increased, first-time buyers have been taking out longer mortgages. In 2006, just over a third (36%) had mortgages lasting beyond the traditional 25-year period. In 2016, 60% of mortgages were for 25 years or more.

More aspiring first-time buyers are also having to factor stamp duty into their costs. Less than a third (29%) of first-time purchases in 2016 were below the £125,000 stamp duty threshold. This share was 45% in 2013.

The average age of a first-time buyer is 30, ranging from 27 in Carlisle in Cumbria and Torfaen in South Wales to 34 in places such as Slough in Berkshire and the London boroughs of Barnet and Ealing.

   Martin Ellis, a housing economist at Halifax, said record low mortgage rates, high employment levels and Government schemes such as Help to Buy have helped first-time buyers. The UK-wide Help to Buy mortgage guarantee scheme ended in 2016, but other schemes are still available.

   He added: “Across the regions there is a contrasting picture. In London – which has one of the youngest populations in the UK – the average house price for a typical first-time buyer is now more than an eye-watering £400,000 with an average deposit of over £100,000 – more than twice that in the South East, the next most expensive region.”

   Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ’The Halifax’s findings are good news in terms of the increase in number of first-time buyers but are also indicative as to what parents and grandparents put themselves through so that they can afford those deposits – with more than £100,000 required in London.

If the housing market is going to function properly, as the government has told us so many times it should, then we need to protect first-time buyers. First-time buyers are the life blood of the market as they tend to buy at the bottom and trade up whereas investors buy at one level and stay there.

Although lenders are supposed to be providing support via Help to Buy now that the mortgage guarantee element has been withdrawn, on the ground we are finding it is not happening in all cases and more flexibility on lending criteria at higher loan-to-values is required.’

Source: http://www.propertyreporter.co.uk/property/ftbs-at-10-year-high.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-188156-Campaign+-+13%2F01%2F2017+MC
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