Stamp duty, or conveyancing duty, is the government tax you must pay on top of the price of your chosen property. The exact amount of this is dependent on a lot of variables, including where you live, whether you are a first time buyer or otherwise, property value, and whether your purchase is for the principal place of residence or an investment.
Stamp Duty Changes
In April 2016, stamp duty changes were once again enacted by the government. This change saw a 3% increase in stamp duty charges on top of existing rates for second home-buyers as well buy-to-let home purchases. In anticipation of this tax update, the period of March 2016 saw a considerable hike in property sales that ballooned up to 71% of regular sales. Many of these purchases were buy-to-let mortgage transactions.
Stamp Duty in a Nutshell
As mentioned earlier, various factors affect stamp duty rates. To give you an idea how much stamp duty you are expected to pay, based primarily on property value, here is a list of computations:
- Property priced between £250,001 and £925,000 (8%)
- Property priced between £125,001 and £250,000 (5%)
- Property priced up to £125,000 (3%)
These tax updates are said to have adversely affected the lower end of the property market spectrum. This means that if you were considering buying a cheaper home, it might not turn out to be that cheap anymore. It was also criticised for causing housing scarcity in general since fewer landlords are amenable to buying new highly-taxed properties to rent out.
If you are considering purchasing your first home, these tax updates need not deter you. Regularly check out stamp duty rates for first-time buyers online so you can anticipate when it is best to make your purchase and plan your big move.