As of midnight on the 3rd December 2014, George Osborne’s recalculation of the Stamp Duty Land Tax (SDLT) came into effect.
We have long called for reform of this tax. The former slab system was not only unfair due to the inequality across all price bands, but the thresholds (particularly at £500,000 and £2m) distorted values and affected asking prices.
Graph 1 shows how there slight benefit between the old and new SDLT for purchases up to 1.2m, however the real punch is felt by those looking to purchase from £1.5m to £2m who previously benefited from the slab system (when there were no thresholds between £1m & £2m). Whilst there is little change at the £2m mark there is a steady percentage rise above this figure and those purchasing at £2.4m are looking at a 20% increase. At £3m the increase is 30%. This is further demonstrated in Graph 2 which shows the percentage changes between the old and new calculations.
The winners from this reform are those purchasing below the £1m level with savings up to 44% on offer. Many would argue that it is this price bracket where purchasers and especially first time buyers, needed the balance and lower SDLT to assist with their purchase or next move. Graph 3 shows the trend up to £1m
The effect on our submarkets of West End, City and Docklands will of course be price point specific but temporary as the new rules become established and embedded in the purchaser psyche. Whilst short term pressure will certainly occur on property prices between £1.5 to £2m, a greater concern is for property over £2m as fears of further taxation by way of Mansion Tax will now be exacerbated in the run up to the General Election, and realised should the next government be a Labour one.
Graph 3: SD Bellow 1M
Telephone: 020 7250 1012