Stamp duty effect?

What effect would you have expected it to have had, and why?

In message , SG writes

Firstly, it's only been a week - what kind of effect did you expect.

Secondly, it only affects properties between £60,000 and £120,000 making them 1% cheaper to buy, i.e. a maximum saving of £1,200. I'm not sure how many of these there are in the SE.

Thirdly, the areas which probably needed help with stamp duty already had it. Designated areas had no stamp duty up to £150,000. I understand that this has now been removed, without fanfare, thus making properties between £120,000 and £150,000 1% more expensive.

Not true! As regards residential property in designated areas, the relevant Inland Revenue press release said :-

"There is no change to the higher threshold of £150,000 for residential transactions in designated disadvantaged areas."

What has been abolished is the total exemption for non-residential properties in designated areas.

Well, even if you can find a halfway decent property for under 120k in the SE, I doubt it'd make much different to the first-timer feeding frenzy.

Jon

In message , John writes

Good. Glad to be proved wrong, (I have a property for sale in one of these areas, and i thought I'd just been screwed again

Does this pay for what he has given away by increasing the normal level?

Indeed it does ... if you look at the Treasury's figures you will see that the extra SDLT on business property in designated areas cancels out the cost to the Treasury of the reduction on residential properties in non-designated areas. To give credit where credit is due .... that was made very clear by the BBC in its analysis of the Budget on Budget Day.

I happen to live in a designated area in Birmingham. Barratts are currently finalising 2-bed starter homes nearly ..... cost £147500 .... so very close to the £150000 figure. So even here the great majority of residential properties are valued over the £150000 figure, so effectively there is no reduction in SDLT for the great majority.

A 1% increase in prices

Because there is the same amount of money available for buying houses as before.

In message , Jonathan Bryce writes

It could easily be a far bigger increase in prices if buyers are buying with the assistance of a mortgage.

E.g. if the purchaser has cash of £6k and was buying at £100k with a 95% mortgage in the old regime, £1k would be nicked as stamp duty.

Now, the borrower has £6k available as deposit and if this represents 5% of the purchase price then a 95% mortgage would fund a £120k house.

"john boyle" wrote

Similarly, 99% mortgage --> price could rise from 60,000.01K to 120K !! [Deposit 600 & SDLT 600 previously, now just 1200 deposit.]

OK - who can tell me how much the price could increase, if the buyer was using a 100% mortgage??... [Clue: consider 99.5% mortgage first!]

Ha! Our Tim has a fascination for the absurd.

JB, the sly so-and-so, has pretended to lose sight of the wider picture.

This is really (or should have been) an "all other things being equal" type of argument. While it's true that with £6k available to fund a deposit (plus SDLT if applicable), our hero could have afforded to bid for a 120k house without SD instead of a 100k one with SD, given a lender's agreement in principle to advance a 95% loan, that agreement might no longer apply to a 20% bigger loan, since this might involve breaching the lender's income-multiples policy, or overstretch our hero's own self-imposed affordability ceiling. He (our hero) knows (doesn't he? Perhaps not, given that such acumen is less typical these days than a borrow-and-be-damned attitude) that buying a 20% dearer house with a 20% bigger loan must needs involve making 20% bigger monthly payments for a long, long time.

So all other things are *not* equal, and Tim has taken JB's sublime example to the ridiculous by continuing to conceal the fact that our hero's monthly payments would now double. Proceeding beyond the ridiculous to the absurd is, well, just plain mischievous.

The answer, of course, if we continue to disregard the implications of higher ongoing payments, is that within the parameters which apply, there exists no pair of before and after prices A and B such that A>60k and B

No. Should it have? £60k would have done just as nicely.

I wouldn't have been so pedantic as to point out, had you used £60k, that actually that amount would not have attracted SD because the limit is inclusive. Frankly, the reason I wouldn't have pointed that out is that I can never remember whether the limits are inclusive or exclusive.

Instead, since you're making an issue of it, I'll be pedantic in a slightly different way by pointing out that, unless I'm mistaken, only whole pounds are recorded for transactions, so the minimum transaction amount to which SD would have applied is £60,001.00, not £60,000.01.

You need to look at income multiples, and the fact that you generally can't borrow the money for the stamp duty.

"Ronald Raygun" wrote

Are you sure? I thought the wording on the transfer doc went something like "... does not form part of a series of related transactions totalling more than 60K ..."? [60,000.50 being more than 60K --- even if the figure recorded is shown as only 60,000.]

No, I'm not sure, but I thought that for the purpose of measuring the size of each transaction in a series, only whole pounds are counted.

There's not much scope for cheating here, really. You could sell a house as a series of many tens of thousands of transactions, each for

99p, and escape SD because the stampable value of each, and therefore the whole, is zero. But it would be much cheaper just to pay the SD because the overhead cost of each transaction is likely to be very much more even than 5p, never mind 1p.

I don't know whether it was ever in vogue for houses, but for ships it's sometimes thought desirable not to disclose to the Registry of Shipping the amount paid, and this is then recorded on the formal bill of sale and transfer form as "One pound and other consideration". Presumably this is only possible because there is no SD on ships.

"Ronald Raygun" wrote

Is that really true?

And if so, does it apply equally to the new SDLT as it did to the old SD??

Well, since the cost of the exercise would be prohibitive, it doesn't matter whether it's true or not. Let it suffice that it's absurd.

In message , Tim writes

No.

The form asks if the transaction forms part of a series of related transactions which total more than the SDL

"Richard Faulkner" wrote

Hi Richard, glad to get an estate agents "Ronald Raygun" wrote

I replied:

"Tim" wrote

But (if I understand him correctly) RR seems to think that you don't add up the *actual* prices, but you add up the *recorded* prices - and these are all rounded down to the lower pound?

In that case, 250,000.99 would be treated the same as 250,000.00 --- and

253,000 related transactions each of 99p would be treated the same as 0.00 ...