“Stamp duty is restricting the market primarily around the £250,000 area.” Says Helen Barry, Partner at QualitySolicitors Rubin Lewis O’Brein. “The housing market in the UK is grinding to a halt, and some of this has to do with the high rates of stamp duty. If we want the market to improve, I think we need to take a good hard look at the stamp duty tax brackets and see what can be done to revise them.”
Currently, houses between £125,000 and £250,000 pay 1% stamp duty but then properties between £250,000 and £500,000 pay 3%. This large jump means a house priced at £249,000 pays tax of £2,490 and a house priced at £251,000 pays tax of £7,530 this is a tax increase of £5,040 when the house price has only increased by £2,000. Due to this drastic difference people with properties worth £250,000-£275,000 tend to either sell their property for under £250,000 to avoid the problem or they struggle to sell their property, slowing down the whole market.
Stamp duty problems mean some sellers feel they are not getting the true value of their property as they tend to have to accept an offer below £250,000. This means they have less funds to buy on and could also put them in negative equity. Buyers will either not consider a property over £250,000 or they will make an offer under £250,000 to avoid the higher tax.
“We would see the initial tax threshold of £125,000 raised and the £250,000 tax bracket to either be 2% tax so there is not such a big jump or a staggered tax bracket.” Continues Mrs Barry. “An example of a more realistic model would be:
£0 – £150,000 – 0%
£150,000 – £250,000 – 1%
£250,000 – £375,000 – 2%
£375,000 – £500,000 – 3%
£500,000 – £1,000,000 – 4% (as now)
This would be a far more reasonable percentage, especially in the current housing market. I believe that this is one way we could significantly improve the property market in the UK.”
For more information regarding Quality Solicitors Rubin Lewis O’Brien, please call: 01633 867 000 or e-mail: firstname.lastname@example.org