RESIDENTIAL PROPERTY - CURRENT TOPICS
STAMP DUTY
From September 3rd 2008 the government announced that the stamp duty for property prices up to £175,000 would be exempt for the period of one year in a bid to help the ailing property market.
Stamp duty is now 1% from £175,000 up to £250,000, 3% for properties between £250,000 and £500,000 and 4% above £500,000.
In some instances duty can also be charged on ground rent payable under a lease. So when acquiring a leasehold property we can always advise of any duty payable once full details of the rent payable is known.
Areas of exemption
The government had already introduced an exemption for stamp duty on all property transactions within, what they term, disadvantaged areas - where the purchase price is less than £150,000. This applies to freeholds and there are exemptions for leasehold properties also. This came into effect on 30 November 2001. The areas to which exemptions apply include parts of Havant, Portsmouth and Southampton. By simply supplying the postcode of the property we can check online to see whether the property you are thinking of buying is exempt.
Avoidance
There are various methods of avoidance - such as apportioning the price between the payment for the property and payment for fixtures and fittings, or the possibility of entering into an option agreement to purchase at a price lower than a figure attracting duty at a higher level. However, we always advise caution - so please contact us. We can advise if what you seek to achieve is both possible and above all else legal!
The Present
The Inland Revenue Website reveals that in 1997 stamp Duty netted £675million which rose to £3.75billion in 2004.
The Future
Whist the measures introduced on 3 September will help first time buyers, the outcry at the high cost of duty has led the Government to consider other options - these include reducing the duty payable by the buyer and then also charging the seller. The level of duty payable by the seller could be assessed on the sale price and increased according to the length of time the seller has owned the property. Only time will tell what the Government will consider - watch this space!
For more details contact John Blake on 023 9238 8021 or email John Blake.