The latest analysis by leading residential park bungalow provider, Regency Living, reveals that UK downsizers can avoid paying an average of £2,400 in stamp duty tax by choosing to purchase a park home instead of a traditional bricks and mortar property.
Regency Living has analysed current stamp duty land tax rules in England to identify how much tax homebuyers can expect to pay in each region of the country* based on local average house prices*.
With a general election just around the corner, political parties have been rolling out numerous housing policy pledges to try and win over voters, including updates to the rules surrounding Stamp Duty Land Tax (SDLT).
As it stands, stamp duty is paid on all home purchases over the value of £250,000. However, the Conservative Party has recently dangled an election carrot by promising to eliminate SDLT for first-time buyers on all purchases below £425,000, while Labour’s plan is to increase the tax by 1% for residential purchases by non-UK residents, using the funds to hire 300 new planning officers.
But under the existing guidelines, how much stamp duty are English buyers actually paying?
What’s the current cost of stamp duty?
The average house price in England is £298,229. On a house purchase of this price, the SDLT bill comes to £2,411.
However, given that average house prices vary so greatly from one region to another, buyers across the country can expect to pay varying amounts of land tax.
There are five regions of England - the East Midlands, North East, North West, West Midlands, and Yorkshire & Humber - in which the local average house price is below the £250,000 threshold which means the average buyer in these locations pays no stamp duty.
The nation’s highest house prices are found in London. The capital’s average price is currently £501,880, for which the stamp duty bill would come to £12,594.
In the South East, the average SDLT bill stands at £6,253, followed by the East of England (£4,272) and South West (£3,395).
Park homes exempt from stamp duty
One way in which buyers are sidestepping these significant stamp duty bills is by choosing to buy park homes instead of traditional bricks and mortar properties. This is because when you buy a park home the purchase is not subject to stamp duty.
This is one reason that park homes are particularly popular among the nation’s downsizers.
Four popular downsizer buying locations are Dorset, Devon, Kent, and Hampshire. So how much SDLT are downsizers in these locations likely to spend on land tax when downsizing to purchase, for example, a terraced home?
In Hampshire, the average terraced home costs £299,349, which means downsizes are still facing an average SDLT bill of £2,467 when looking to move to a smaller property.
In Kent, the average stamp duty owed on a terraced home is £2,047, followed by Dorset (£1,400) and Devon (£558).
In all of these locations, downsizers can avoid paying any stamp duty whatsoever by opting for a park home, while still benefiting from the lifestyle benefits of these popular retirement destinations.
A Regency Living spokesperson commented:
“It seems that the outcome of the upcoming election will have a significant impact on how much stamp duty England’s homebuyers are required to pay, but regardless of who wins, the vast majority of downsizers will still be confronted with the tax.
While the Tories try to win over first-time buyers and Labour looks to crack down on overseas buyers, retirees and downsizers are being largely forgotten. However, those making a park home purchase needn’t worry, as by doing so they are able to sidestep the cost of stamp duty altogether.
Not only are they getting an ideally sized home in a picturesque and desirable location, but they’re saving significant money on the purchase in addition to the equity released on their previous home, money that can be spent enjoying all of the best things that life has to offer.”
Data tables and sources
