Stamp duty changes ‘to benefit 71%’

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Published: Sunday 22nd February 2015 by The News Editor

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More than eight in 10 home buyers in London, the South East, the South West and the East of England stand to benefit under the new stamp duty rules, while in the North East less than half of buyers will save money, a new report estimates.

Nationwide Building Society made the findings after analysing property sales data from the Land Registry over the last year, covering England and Wales.

It looked at parliamentary constituencies across the country to pinpoint exactly how the overhaul of stamp duty unveiled in December could impact on house sales in the coming months.

Across England and Wales, more than two-thirds (71%) of house sales are likely to benefit from the changes, while 2% will involve more stamp duty being paid, according to Nationwide’s estimates.

The figures indicate that the reforms are likely to have a much larger impact on the housing market in southern areas of England than the rest of England and Wales.

Homes worth more than £125,000 are liable for stamp duty. The benefits of the changes tend to be greater in areas where average house prices are higher and therefore a higher proportion of transactions are liable for the duty.

Nationwide said that the greatest impact of the changes is likely to be for those looking to buy a property worth just above £250,000, who could save around £5,000 in tax.

When it made the announcement, the Government said that someone buying a home worth less than £937,500 would pay the same or less stamp duty as a result of the changes.

The tipping point, where buyers start to pay more as a result of the changes, comes above this point.

In both London and the South East, an estimated 86% of house sales stand to benefit from the changes, marking the highest proportion across all regions.

But London also has the highest proportion of transactions where buyers will end up paying more in stamp duty as a result of the changes, at 7%.

The report said this reflects the fact that house prices in the capital are substantially higher than elsewhere, meaning almost all transactions in London are liable for stamp duty.

Kensington in central London, where property prices are particularly high, was found to be the only constituency in the country where the majority of home buyers are expected to be worse off under the new system, with 51% expected to be paying more as a result.

The reforms, announced in the Autumn Statement, have replaced the “slab” structure of stamp duty, where buyers paid tax at a single rate on the entire property price, with a graduated version of the tax, so that buyers only pay tax on the part of the property price that falls within each tax band.

After London and the South East, the South West and the East of England are the regions most likely to benefit from the changes, with 81% of transactions seeing a lower amount of stamp duty paid.

At the other end of the spectrum, just over 53% of transactions in Wales and Yorkshire and the Humber are likely to see a benefit from the reforms, while in the North West the proportion is 51% and in the North East it is 45%.

There were also large variations in the amount that buyers who will be better off under the changes are likely to save.

In London for example, those buyers who are better off are typically expected to save £2,175 compared with the old system, whereas in the North East of England the average saving has been put at £1,205.

In the Carshalton and Wallington parliamentary constituency in Sutton, London, an estimated 95% of house sales taking place will see a reduction in stamp duty, but in Rhondda, South Wales, which includes Tonypandy and Treherbert, only 7% of sales will involve a stamp duty saving.

Nationwide said that the average stamp duty payable in Rhondda under the new system is expected to be less than £75.

In St Albans in Hertfordshire, 92% of transactions are predicted to see a reduction in stamp duty, while in Middlesbrough in the North East, the proportion is 22%. In Liverpool, only 8% of transactions in the Walton constituency are expected to see a reduction in stamp duty payable.

The average stamp duty payable in Walton is predicted to be less than £50 under the new stamp duty rules, which is the lowest of all the English and Welsh constituencies.

Here is the expected impact of the stamp duty changes by region, according to Nationwide Building Society, with the percentage of transactions expected to see a benefit followed by the percentage seeing no change and the percentage which will pay more (some figures have been rounded):

:: London, 86%, 7%, 7%

:: South East, 86%, 13%, 2%

:: South West, 81%, 18%, 0%

:: South West, 81%, 18%, 0%

:: East of England, 81%, 18%, 1%

:: West Midlands, 61%, 39%, 0%

:: East Midlands, 58%, 42%, 0%

:: Wales, 53%, 47%, 0%

:: Yorkshire and the Humber, 53%, 47%, 0%

:: North West, 51%, 49%, 0%

:: North East, 45%, 54%, 0%

:: England and Wales, 71%, 28%, 2%

And here is the average saving that home buyers are expected to make in each region as a result of the changes, followed by the constituency in that region with the highest proportion of buyers who will be better off as a result of the reforms and the constituency with the lowest proportion benefiting:

:: London, £2,175, Carshalton and Wallington, Kensington

:: South East, £1,740, Wokingham, Dover

:: South West, £1,445, Mid Dorset and North Poole, Plymouth, Moor View

:: East of England, £1,540, St Albans, Peterborough

:: West Midlands, £1,330, Kenilworth and Southam, Stoke-on-Trent Central

:: East Midlands, £1,225, South Northants, Nottingham North

:: Wales, £1,220, Cardiff North, Rhondda

:: Yorkshire and the Humber, £1,270, York Outer, Kingston upon Hull East

:: North West, £1,290, Altrincham and Sale West, Liverpool, Walton

:: North East, £1,205, Hexham, Middlesbrough

Published: Sunday 22nd February 2015 by The News Editor

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