Current SDLT Relief Thresholds
As it stands, existing homebuyers currently pay no SDLT on purchases up to £250,000, with 5% charged on the proportion of house price between £250,001 to £925,000, 10% charged on the proportion between £925,001 and £1.5m and 12% paid on any value of a home over £1.5m.
The thresholds differ for first-time buyers who currently pay no SDLT on purchases up to £425,000, whilst 5% is applicable between £425,001 and £625,000, although no relief is afforded on first home purchases over £625,000.
What changes are on the horizon?
As of April next year, the current SDLT relief in place is set to end, with hopes of an extension dashed during last week’s Autumn Statement.
As a result, existing home buyers look set to be paying more SDLT from April next year, when the previous threshold of 2% is re-introduced on the value of a home between £125,000 to £250,000.
What does this mean for existing homebuyers?
Well, for those who purchase a property for £250,000 or more, it will see them hit with the maximum increase in SDLT - £2,500 - versus what they would currently pay now. Those purchasing a home below £250,000 will pay an additional 2% versus today on the proportion of their property price that exceeds the £125,000 threshold.
Analysis of current market values by Regency Living* shows that existing homebuyers in no less than 99% of local authorities across England are set to be hit by a SDLT increase. In 67% of these local authorities, existing homebuyers will see the maximum jump of £2,500 due to the current average house price exceeding the £250,000 threshold.
A further 32% of local authorities in England are home to an average house price of between £125,000 and £250,000, meaning they will see SDLT increases ranging from £37 in Hyndburn where the average home costs £126,861, to £2,483 in Torbay, where the average home is currently valued at £249,135.
In fact, just one area of the market will currently see existing home buyers remain exempt from paying SDLT from April of next year and that’s Burnley, where the average home is currently valued at £112,640 - well below the £125,000 threshold.
Sales & Marketing Director at Regency Living, Tim Simmons commented:
“Homebuyers across the nation will be understandably disappointed to see that no extension to current stamp duty relief thresholds was granted in this week’s Autumn Statement.
The good news is that, for first-time buyers, purchasing a home at £300,000 or less will still see them pay no stamp duty, however, it’s existing homebuyers who are likely to be hit with the largest increase in costs when it comes to purchasing.
For many, this increase will be £2,500 and will see the average existing homebuyer across England paying £5,500 in stamp duty. However, this climbs north of £10,000 in 55 local authorities and as high as £58,000 in the most expensive areas of the market.
Whilst having a foot on the ladder does put them at an advantage to some extent, stamp duty remains a substantial financial barrier that delays homebuyers at all rungs of the ladder.
It’s hardly surprising that one of the biggest draws of the residential park home sector is the fact that park home buyers don’t pay any stamp duty on their purchase. So not only do the majority benefit from releasing equity in their bricks and mortar home, but they also face lower costs when purchasing, putting them in a great position financially.”
