The burden of stamp duty on purchasers within the residential and commercial sector has never been so important.
Since George Osborne reformed the stamp duty land tax (SDLT) in the Autumn of 2014, property professionals have been quizzed by purchasers trying to work out their liability. Post 2007, stamp duty was one of the highest earnings before the credit crunch.
The treasury looked closely at stamp duty due to its high earning potential for the government which has not been reviewed since 2003.
The financial crisis of 2008 lasted for a decade and now that the property industry has seen increases in transactions, the new stamp duty regime has come into play for the treasury. The current residential stamp duty bands are as follows:
The non-residential properties have a lower stamp duty rate where savings can be made, making the purchase of commercial properties more attractive. The rates for non-residential properties and mixed-use properties are below:
Stephen Richards, Head of Commercial comments “There is still confusion in the market regarding stamp duty and we get asked on nearly every purchase what the rates are as there seems to be some confusion within the market. Obviously purchasers are looking to save money where they can when buying property and many professionals are unhappy to give advice which leads to further confusion. Humberts have seen an increase in demand for commercial properties and investments. Many purchasers are looking to buy commercial properties within their pension funds (SIPP) and the new stamp duty rates favours a commercial purchase or a mixed-use property which is classed as non-residential which has re-fuelled this side of the market over the last couple of years.”
Will Bankes, Regional Manager for Kent & Susses comments "George Osborne’s SDLT plan continues to be a burden on the upper end of the residential housing market with extortionately high tax rates limiting activity. It has also made the proposition of becoming a new landlord very unattractive combined with the changes to the landlords tax relief. Despite some tax cuts for first time buyers, overall transaction numbers are down and subsequently so are the tax receipts to the government. The general public seem to be taking a “wait and see” attitude due to some market uncertainty. This is affecting buyer demand but is also holding vendors back as well leading to a static market with house prices remaining stubbornly high. There is a lack of good quality homes available for sale but those that do come to market, that are sensibly priced are still selling well. The current tax system is confusing to buyers and home owners alike and tax duty reform could be the key to adding some fluidity to the market with difficult trading conditions set to continue."
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