The End of Stamp Duty & Land Tax Holiday

Maureen Chigboh Anyandi, Partner at Blavo & Co is using this time to remind home buyers of the end of the Stamp Duty Land Tax holiday, for the purchase of properties valued at up to £250,000. This Tax holiday reaches completion on Saturday 24th March.

The end of this deadline is approaching, and in 2 months time on 24th March 2012, the Stamp Duty and Land Tax holiday will be coming to an end.

Buying a home is about to get even more expensive for some first time buyers. Stamp Duty Land Tax is a tax on property and land purchases and can make a significant difference to the cost of a house. In an attempt to make life easier for first time buyers, a Stamp Duty holiday of two years was announced back in the 2010 Budget.
The idea that the Stamp Duty holiday would help first time buyers get on the property ladder. For years now it has become progressively more difficult for first time buyers to access the property ladder, with prices rocketing, and lenders requiring even larger deposits. Some experts hoped the scheme would be extended beyond the March deadline, but in the Autumn statement last November, George Osborne announced that the Stamp Duty holiday would end as planned.

After March 25th the rules will revert to normal, meaning anyone buying a property for more that £125,000 will have to pay stamp duty of at least 1%. Crucially the key date is the completion date, so first time buyers currently buying a property will be pushed to complete the deal by 24th March at the very latest.

If you’ve yet to find a property to buy it will be difficult, although not impossible to take advantage of the Stamp Duty Holiday. In theory, property purchases can take just a few weeks but surveys, valuations and slow moving solicitors mean most transactions take a couple of months. If you act quickly and chase up all the players involved in the move, it can be done. What’s more, being able to act quickly may make you even more attractive as a buyer and allow you to negotiate the purchase price down.

Stamp Duty

The rate of Stamp Duty you pay depends on how much you spend on buying the property. For property purchases between £125,001 and £250,000 you pay 1%, then 3% from £250,001 up to £500,000, 4% from £500,001 to £1m and the 5% for properties over this value. Unlike Income Tax, which is ‘tiered’ with different rates kick in at different levels, Stamp Duty is a ‘slab’ tax where you pay the rate on the whole purchase price of the property rather than just the amount above the threshold.
Because of this, Stamp duty can distort the housing market. For example, a house priced at £250,000 would attract tax of £2,500, but one of £250,001, would be liable for a £7,500 bill. The result is that it can be very difficult to sell at prices just above each threshold. First time buyers buying a £250,000 property on or before March 24th 2012 will pay zero stamp duty, but those buying the same priced property from that date onwards , will pay another £2,500, which will make a great deal of difference to the affordability of the property.
The Government defines a first time buyer as someone who has ‘not previously purchased an interest in a property or its equivalent anywhere in the world.’ So if you have previously owned a property then unfortunately you will have to pay the tax too. If you’re buying a place with a partner who has previously owned a property then you’ll have to pay the tax too.

Any Queries relating to this change in Stamp Duty Tax, or any other Housing related issues, contact Maureen Chigboh-Anyandi at Blavo & Co Solicitors on +44(0)20 8349 8020 Maureen is a Partner of the firm and Head of the Property and Housing Department at Blavo & Co Solicitors Ltd where she has been since joining the firm in 2007.

Maureen heads up Blavo & Co’s Barnet office which services Barnet and surrounding areas, opened in January 2009. Maureen is a member of the Housing Law Practitioners Association, Family Law Panel Member (Resolution), Member of the International Division of the Law Society and Association of Women Solicitors. She participates on the Solicitors Probono scheme.