The Stamp Duty regime for residential properties changed in December 2014.
The previous regime charged Stamp Duty at a fixed percentage for purchase prices falling within specified brackets. For example, a purchase price of £0 to £125,000 attracted Stamp Duty at 0%, a purchase price of over £125,000 and up to £250,000 1% and a purchase price of over £250,000 and up to £500,000 3%. The percentages continued to rise, with a maximum of 7% for purchase prices over £2 million.
The old regime was potentially restrictive for sellers trying to achieve the best price for their properties because buyers would try to limit their Stamp Duty by offering slightly below a certain bracket figure, which would potentially save them a few thousand in Stamp Duty fees and also in the purchase price.
The new Stamp Duty regime is slightly more complicated. It will introduce a stepped approach to the percentage that is charged. Under the new regime, a purchase price of £505,000 will attract Stamp Duty at 0% on the first £125,000, 2% on the next £125,000 (i.e. difference between £125,000 and £250,000) and 5% on the next £255,000 (i.e. difference between £250,000 and £505,000). Therefore, the total Stamp Duty due will be £15,250.
Under the new regime, purchasers of low- to mid-value properties will most likely pay less Stamp Duty than under the old regime. This means that sellers will be able to negotiate sale prices that better reflect the true values of their properties, without the amount of Stamp Duty being too restrictive.
However, purchasers of high value properties will potentially suffer under the new regime, because the Stamp Duty brackets for high value properties have increased dramatically. For that portion of the agreed purchase price falling within the £925,000 to £1.5 million bracket, Stamp Duty will be charged at 10%. And for the portion falling over £1.5 million, Stamp Duty will be charged at 12%.
It will be interesting to see what effect, if any, the new Stamp Duty regime will have on the ever-strengthening property market in Yorkshire and beyond.