ENTERTAINMENT

Should I postpone the purchase of a new house to possibly save stamp duty?


My wife and I are considering climbing up the property manager and buying our second home. We have a budget of around £ 450,000 and have visited one or two houses we are interested in.

However, I noticed rumors of a potential stamp duty tax cut on property sales below £ 500,000 – for all buyers, not just first-time buyers.

We would be at the top end of the scale – if we were to buy somewhere for £ 450,000 we would look at £ 12,500 for stamp duty – it would be much better if it were zero. So should we hold back? How probable is it?

Would this also have an immediate impact on prices? Would more people be willing to buy and create more demand?

Time for change: Mr Johnson told MPs that stamp duty revision is needed

MailOnline real estate expert Myra Butterworth answers: Speculation about changes in stamp duty increased after the change in conservative leadership.

Within a few days of Boris Johnson becoming the new prime minister, it was announced that a stamp duty revision was planned.

It has been reported that the changeover could take place as early as September, if the new chancellor is likely to have an early emergency budget.

Mr Johnson informed MPs that a stamp duty revision is needed to help first-time buyers climb the ladder and re-energize the London property market.

A proposal under consideration would increase the property value at which stamp duty is levied from GBP 125,000 to GBP 500,000.

Another more radical measure is to transfer liability for paying the levy from the buyer to the seller.

First time buyers are already exempt from paying the fee for houses bought for less than £ 300,000. However, this would completely remove buyers up to £ 500,000 from the system.

We ask your question to two experts:

Jonathan Harris, director of Anderson Harris mortgage broker, says: The changes in stamp duty proposed by Boris Johnson would give buyers a boost – in your case, save the not inconsiderable sum of £ 12,500.

But even if they happen and it's an "if", it's hard to see that they happen soon.

It's fair to say that he has a lot to do with Brexit, and that is likely to get the most government attention, at least in the next few months.

For buyers who need to move for a reason – for schools, relocations, or because of divorce or grief – it may not be practical to postpone buying a home in the hope of changing stamp duty.

It sounds like you need more space – can you wait, which may take longer than a few months before we see what happens?

If you have found a property you want to buy due to the lack of storage, it may be advisable to get in and do it instead of holding back and waiting.

Otherwise, you may find that someone else has taken over the property, and it may take a long time to find someone else.

A proposal under consideration would increase the property value at which stamp duty is levied from GBP 125,000 to GBP 500,000

A proposal under consideration would increase the property value at which stamp duty is levied from GBP 125,000 to GBP 500,000

They are also wondering if the changes would lead to an increase in property prices.

There would surely be more buyer demand, but whether more sellers bring their homes to the market is another question.

We may notice increased demand, but not more supply, which can lead to higher prices. This will end up costing you more and eliminating potential stamp tax savings.

There is so much uncertainty and you cannot rely on stamp tax reform at all.

Even if Boris Johnson holds out the Brexit, has parliamentary elections, wins and receives a larger majority, he can still decide not to reform the stamp duty.

He couldn't even be in power in a few months, we just don't know.

If you've been looking for a property, you've already taken the stamp tax costs into account, and you may just have to swallow and pay.

The deal will take several months to complete. At this point, stamp duty changes may have been made so you don't have to pay.

It should also be borne in mind that mortgages are currently very competitive, which may not be the case in six months or a year when interest rates start to rise.

Jeremy Leaf, North London real estate agent and former RICS chairman, says: Given the government's razor-thin majority, it may not be politically acceptable to make stamp tax changes that benefit all buyers in this Parliament.

It is more likely that there is a concession for first-time buyers.

Even if this had happened, the pent-up demand that has existed for several years since the referendum would likely negate any potential benefits.

This is especially true for the margins that are between £ 450,000 and £ 500,000 that you buy from.

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I would say that you are better off negotiating as hard as you can, taking advantage of current uncertainty and doing your best to get a better price.

Of course, this depends on the supply and demand in the area you are looking for.

Delaying your completion is another approach that keeps your options open.

Stamp duty is unlikely to switch to sellers rather than buyers, but it would still be healthy to have the debate and consultation to determine if there is an appetite for it.

It might be a very good idea, but it depends on where the rate is; If it's punishable, it could be worse than the current system.

What we want is more transactions than boom and bust in prices, which will improve professional and social mobility.

What do real estate agents say?

In the latest Rics market surveys, a number of real estate agents – mainly located in the Southeast – say that stamp duty has a negative impact on sales:

Harrow's David Conway said: "Stamp duty costs and raids to leave landlords with additional taxes have dampened the market with fewer instructions and sales."

Cobham's Anthony Webb said: "Uncertainty about Brexit continues to stagnate in the market, which is associated with excessive stamp tax costs."

E M Rook based in Sevenoaks: "Brexit and stamp duty are not gone."

Maidenhead's James Farrance said: “Encouraging number of new buyers. Homeowners continue to believe that stamp duty is the main cause of the move. & # 39;

Guildford's Tony Jamieson said, "The right house at the right price will still sell, but stamp duty is a problem."

London's J.J. King said: & # 39; Converting market valuations into instructions over £ 2.5m remains low due to the buyer's expense. Lowering stamp duty rates would boost market activity, but is currently stagnating. & # 39;

London-based James Perris said, "Activities have improved, although our new prime minister needs to adjust stamp duty to boost the London market."

John Corben of Swanage, Dorset, said: “The property market continues to stagnate. A government initiative is needed to boost the market. The abolition of the stamp tax surcharge of three percent for second homes and properties would be a huge advantage. & # 39;

I C Macklin, based in Hale, Greater Manchester: "A reduction in stamp duty on higher-value properties would be welcomed."

Myra Butterworth adds: Stamp duty has become an increasingly controversial issue due to the amount of money that increases the cost of moving home.

Stamp duty is a tax on real estate bought in England and Northern Ireland and you have to pay it for houses that cost more than £ 125,000 – unless you are a first time buyer.

Stamp tax rates

The stamp tax rates are as follows:

£ 0- £ 125,000: 0%

£ 125,001 – £ 250,000: 2%

£ 250,001 – £ 925,000: 5%

£ 925,001 – £ 1.5m: 10%

Over £ 1.5 million: 12%

The stamp tax rates apply only to the part of the property price that falls in each volume.

For properties that cost up to £ 300,000, those who climb the ladder for the first time do not pay stamp duty.

Up to £ 500,000, they don't pay stamp duty on the first £ 300,000, but the remaining amount.

For purchases over £ 500,000, normal stamp duty rates apply to the entire purchase price.

There are several thresholds depending on the prices of the property you have bought. If you buy a second home or a property to buy, you pay a three percent surcharge.

The tax was revised in 2017. Under the old rules, buyers paid taxes at a single rate on the total property price.

Today buyers only pay the tax rate for the property price within the individual tax bands.

Since the 2008/09 financial year, when the real estate market was hit by the credit crunch, stamp duty income on residential property has risen from GBP 2.9 billion to almost GBP 10 billion.

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