Dacres - Yorkshire's Leading Estate Agent

Stamp Duty Exemption Finishing Soon.

Government exemptions from Stamp Duty Land Tax (SDLT) are due to end on the 31st December 2009; subject to any change of heart by the Chancellor.

To help buyers understand the position fully we asked David Louden, Managing Partner of Newstead & Walker, Solicitors, of Otley to explain:  

''Stamp Duty is a tax payable by the buyer of a property. Concessions were announced in the Budget earlier this year exempting property purchases in the £125,001  to £175,000 range form the current rate of tax  - 1% of the full purchase price. Previously only buyers spending up to £125,000 were exempt. The principle was to try and stimulate the lower end of the property market during the economic uncertainty of last spring,  by removing a substantial additional cost to buyers. However, the concession is due to end on the 31st December, so anyone currently buying properties in the £125,001  to £175,000 price band had better get their skates on to take advantage of the concession." 

There is of course the possibility that The Chancellor may announce an extension to the concession in the forthcoming pre budget report, but given the pressure that the public finances are under, one has to question whether this is a realistic hope. Furthermore as Dacre Son & Hartley's own sales performance shows, the property market is now significantly healthier than it was in the spring of this year, further reducing the pressure to implement a stimulus package.

SDLT can often be a source of confusion to buyers, so by way of further explanation for those facing a tax charge,  David adds:  

''The key date for the tax liability is usually the date of completion, but this can be brought forward - sometimes by accident - to a date when the contract is "substantially performed".  A classic example of this would be where the buyer takes possession of the property after exchange of contracts but before legal completion, perhaps to do building works."   

''It is also worth emphasising that when calculating the  amount of tax payable, it is necessary to first determine the band which the purchase price falls in to, and then apply the appropriate percentage rate to the whole of the price - for example a family buying at £300,000 would pay a flat rate of 3% on the full amount ."

Current rates of tax for residential property (correct as of 16/11/09) are as follows:      

Value                                         %
Up to £125,000                           Nil
£125,001 to £175,000                  Nil (up to 31.12.2009)
£175,001 to £250,000                  1
£250,001 to £500,000                  3
Over £500,000                            4 

"Buyers should keep a lookout for any changes which The Chancellor may announce to the previously published plans, which may also see changes in the rates and the threshold levels of these bands ," concludes David.

David Louden is a Partner at Newstead & Walker, Solicitors, and has many years of experience in dealing with property matters throughout  the region.  He can be contacted on david.louden@newsteadwalker.co.uk