New Home Owners And Snagging Forum

Home Owners => Buying and Selling => Topic started by: Banjo on June 03, 2011, 10:05:00 am

Title: The cost of Stamp Duty
Post by: Banjo on June 03, 2011, 10:05:00 am
Does the cost of Stamp duty put you off moving?

The main website has some good information.
Check out how much Stamp Duty you will have to pay using the Stamp Duty calculator at Stamp Duty Calculator (http://www.brand-newhomes.co.uk/stamp-duty-calculator.htm)

With all the other costs, estate agents fees, conveyancing fees etc this really is the last straw.
Check out the full cost of moving:   The cost of moving (http://www.brand-newhomes.co.uk/the_cost_of_moving_to_a_brand_new_home.htm)

I think the threshold will stay at the current levels for years and as property prices increase over time, nearly all transactions will incur the highest rates of stamp duty.
Title: Re: The cost of Stamp Duty
Post by: The Prophet on June 04, 2011, 07:06:58 am
Anyone buying a house just above or near the stamp duty tax thresholds must be mad.

For example a £505,000 house will incur Stamp duty of £20,200. A £495,000 will have £14,850 Stamp Duty Tax - £5,350 less tax for a reduction in price of just £10,000.
Title: Re: The cost of Stamp Duty
Post by: FirstTimeBuyerGuru on July 18, 2011, 09:24:01 pm
Of course the idea is to buy a property at the first time buyer stamp duty relief threshold of £250,000, and then add value to it until you can get past the dead zone of up until around £270,000-£280,000.
Title: Re: The cost of Stamp Duty
Post by: Philofacts on July 19, 2011, 08:47:23 am
It can take a long time for the price to rise from £250,000 to say £295,000 the next  price barrier.
Unless you buy somewhere that needs a lot of renovation it could take ages in this market!

A first time buyer would need to pay LESS than £250,000 to qualify for a zero rate which is only valid until 25th March 2012.
No doubt there will be a spike in First Time Buyer activity just before then!
Title: Re: The cost of Stamp Duty
Post by: FirstTimeBuyerGuru on July 19, 2011, 09:36:11 am
I absolutely agree Philofacts, it would have to be in need of some fairly good rennovation. It's such a shame that this silly system exists. In your opinion, what are the best things to look out for home that would lend itself to getting such a large increase in value out of it? Should one look for loft space, enough room for a conservatory?
Title: Re: The cost of Stamp Duty
Post by: Philofacts on July 19, 2011, 09:48:12 am
If you increase the price the amount of stamp duty also increases.
Only carry out improvements that will give YOU a benefit - dont just do it for a paper "profit"
Title: Re: The cost of Stamp Duty
Post by: FirstTimeBuyerGuru on July 19, 2011, 11:08:20 am
Absolutely. I personally hate conservatories! Although I like them when it's raining, but in general I feel like im in a greenhouse!
Title: Re: The cost of Stamp Duty
Post by: The Prophet on July 20, 2011, 08:45:06 am
Conservatories also take away some of a value asset  - your garden.
Title: Re: The cost of Stamp Duty
Post by: Banjo on July 20, 2011, 09:07:50 am
I would never buy a property over the 1% rate for Stamp Duty.
I would want a reduction in the price to cover the additional Stamp Duty I would pay.
Title: Re: The cost of Stamp Duty
Post by: FirstTimeBuyerGuru on July 21, 2011, 06:26:32 pm
Some buyers and sellers actually personally agree a secondary transaction for something spurious like the furnishings in the home, thus allowing the seller to sell for less but recoop some of the costs the buyer would have paid in stamp duty.
Title: Re: The cost of Stamp Duty
Post by: Banjo on July 22, 2011, 09:02:44 am
I had wondered whether you could do this for say a separate garage or the grounds.  But I think it needs to be a separate transaction as the form says:
"This is not part of a transaction or series of transactions relating to the same property"  and no doubt the legal fees would also be doubled!
They will always get you. 
If you can trust the purchaser you could pay part with cash or home exchange - setting prices to reduce the Stamp duty payable.

Self build is a good way of not paying any Stamp Duty, you only buy the land and that should be below the 1% threshold.
Title: Re: The cost of Stamp Duty
Post by: FirstTimeBuyerGuru on August 07, 2011, 11:50:04 am
I believe the only way you could add enough value to buy at £250,000 and sell for £300,000 a few years down the line (the area where people might start considering paying stamp duty again) would be to add a loft conversion and gain another bedroom.

I'd be interested to hear other people's opinions.
Title: Re: The cost of Stamp Duty
Post by: Philofacts on August 08, 2011, 11:32:01 am
I would agree that £50,000 is the least amount of value added to make the next rate of stamp duty charged worthwhile.
Certainly adding extra rooms would add value.