The Autumn Statement brought about a long awaited and much needed change to the Stamp Duty Land Tax (SDLT) system.David Ramsdale, Research Analyst
House prices across England and Wales in October were just 0.1% higher than the previous month, but up 7.7% on a year ago, taking the average house price to £177,377, according to the Land Registry. At a regional level both the South East and East of England continue to benefit from the ripple effect from London as house prices picked up by 11.4% and 11.0% respectively in the year to October. All regions saw annual house price growth above the rate of inflation though the North east (2.7%) and Wales (2.0%) saw more muted growth. Annual house price growth in London, the South East and East averaged 13.6% in October compared to just 4.3% for the rest of the country.
The Autumn Statement brought about a long awaited and much needed change to the Stamp Duty Land Tax (SDLT) system, moving the tax away from the slab system that had been in place since 2000, to a new progressive system. Under the previous system tax was paid on the purchase price of the property, with different rates applying at different price bands. However, the new progressive format means that tax is paid at different rates for certain amounts of the purchase price.
As a result of the changes, effective from December 4 2014, the majority of property buyers will benefit from the progressive taxation, with property transactions below £937,500 seeing a reduction in stamp duty. For example, if you bought a property for £450,000 under the old system you would have been required to pay £13,500 in stamp duty. The new changes mean that a property bought for £450,000 will be liable to £12,500 in Stamp Duty, a £1,000 saving. Above £937,500, with the exception of properties sold between £1 million and £1.125 million, buyers will now pay more in stamp duty.
Mortgage lending figures for October from the Council of Mortgage Lenders show an everimproving picture in the buy-to-let market. A total of 19,600 loans were advanced in October, up 8% month-on-month and 22% year-on-year. The value of buy-to-let loans increased to £2.7 billion, a rise of 8% and 29% respectively. Of the 19,600 loans 9,900 were advanced for buy-to-let house purchase purposes, representing a 13% increase from September and a 20% rise from October 2013. On a value basis buy-to-let house purchase loans picked up 10% and 28% to £1.2 billion. A total of 9,500 loans were advanced for buy-to-let re-mortgaging, up only 3% on September but 23% higher on a year earlier. The value of buy-to-let re-mortgaging loans stood at £1.4 billion, just 2% higher than the previous month but 26% higher than October last year.