The real cost of stamp duty land tax (SDLT) - 24th June 2024

Property Vision, Independent property buyers in the UK and one of our Associated Professionals, recently reported on the impact of stamp duty and the disincentive it causes for many owners, those in London in particular. Whether upsizing or downsizing, costs are high (stamp duty is currently 12% on every pound over £1.5m) and owners are choosing to stay put unless the sale is forced by one of the three D’s: death, divorce or downsizing.

We [Essential Wealth] reviewed some figures. If you are selling a house at £3m and buying one for £6m you don’t just need to finance the gap between these figures, you will also need £631,250 in SDLT and considerably more if it is your second home and/or you are a non-UK resident. In practice, this means stamp duty has raised the cost of a £3m upgrade by approximately 21%.

Things are also difficult if you are looking to downsize, if you own a £6m house and want to downsize to one for £3m you will have to pay £271,250 in SDLT which is a large slice of your equity gone.

Property Vision also commented on the soaring costs of refurbishments, whilst historically unmodernised properties were very attractive to buyers, refurb costs have risen so much but are rarely considered fully when setting an asking price with the result being an unbridgeable gap in buyer/seller expectations.

Stamp duty is a good source of revenue for the government, £11.7 billion was raised from residential SDLT in 2022/23, an increase of over 15% on the previous year. In the local authority area of Westminster alone SDLT cost buyers £765m; money on which most would already have paid income tax.

Sources:

Gov.uk

Property Vision