Impact of the stamp duty overhaul on residential property

By Paul Emery, stamp duty taxes partner

People buying an average home will have more money to spend if they complete on their purchase tomorrow. On a £300,000 house (the UK average price) they could save £4,000 (the price of a small family car) as stamp duty land tax changes from the ‘slab basis’ to a ‘progressive rate’ from midnight tonight.

This is also fantastic news for homeowners of property valued in the dead zones above the £125,000, £250,000 and £500,000 bands where they have typically not been able to realise the full value of their homes. In future, sellers will benefit as they won’t be forced to drop their price around the cliff edges at £125,000, £250,000 and £500,000 where the rates moved from 1% to 3% and 4%.

But buyers of property worth more than £937,500 will pay more and this will have a disproportionate impact on London and the South East.

This moves away from the current slab tax to a progressve tax, taking the lead from the new Scottish version of stamp duty. New rates will come into force at midnight tonight for the whole of the UK but will change again in Scotland on 1 April 2015.