How stamp duty reforms have helped property sellers
George Osborne’s sweeping stamp duty reforms, announced as part of his Autumn Statement in December, have increased people’s chances of selling their house for its asking price or above.
The abolition of the old slab structure, unpopular with property buyers and sellers alike, has helped remove stamp duty ‘dead zones’, where sellers were losing almost £7,500 per sale on average. Under the old system people would pay stamp duty as a percentage of the full buying price. In other words, if you were buying a property for £250,001, you would pay out a lot more on stamp duty than if you were purchasing a house for £249,999.
This regressive tax led to the creation of the aforementioned ‘dead zones’, where the number of sales in the price band immediately above a threshold was considerably lower. This is because buyers would be more likely to hold out on purchases to avoid paying a much greater share of stamp duty. This, in turn, meant sellers lowering their asking prices in order to sell. Under-priced properties, after all, are bound to be more attractive to buyers.
Thanks to the introduction of the new, more progressive system, this is no longer the case. Sellers no longer have to lower their asking prices to appeal to buyers, because the stamp duty tax being charged is much less prohibitive.
To further highlight this, consider the following before and after scenario. If someone was buying a £300,000 property before December, stamp duty would have been £9,000 as the buyer would have had to pay a tax of 3% on the whole £300,000. Now, however, if you buy a property for £300,000 you will pay no tax on the first £125,000, 2% on the next £125,000 and 5% on the final £50,000. This adds up to a bill of £5,000, a £4,000 saving from the previous system.
The reforms were already having an effect by late January, according to data from the National Association of Estate Agents (NAEA). The NAEA said that a fifth of agents witnessed more sales in properties in the £251k to £925k band, the middle market that was typically most negatively affected by the old ‘slab tax’.
Additionally, instead of being another stumbling block for first-time buyers alongside unaffordable deposits and difficult to acquire mortgages, the new stamp duty structure will do more to encourage rather than deter young people from entering the market.
More than anything, the stamp duty changes will mean that sellers are more likely to achieve the actual property value (or above) rather than devaluing their homes to sneak under certain bands. Sales will be carried out quicker with less haggling and renegotiation required – good news for both buyers and sellers in Brighton and beyond.
At Mishon Mackay we are estate agents who have always strived to achieve the very best price for our clients’ properties, ensuring a smooth and hassle-free process along the way. We offer a Cross City Selling service across Brighton and the South Downs, aiming to enhance the chances of you matching your property to the ideal buyers.
For more advice on selling your property in Brighton, Hove and the surrounding areas, please contact us on: 01273 821 800. We also provide a handy instant online valuation to give you an idea of how much your house is worth in the current market.