To think new stamp duty is unfair on London AGAIN

[stupendoushorrendous]

Aibu to think that the new stamp duty rates will unfairly hit Londoners compared to an equivilent person (in wealth terms) elsewhere.

Example, Family bought their house for say £300k many years ago, value has gone up considerably. If they want to move to a different house of equivilent value they could be subject to over £100K in stamp duty. Their mortage could be doubled simply because they want to move.

Surely, this increase in tax could mean it is impoosible for some Londoners to move locally should they need to.

Actually those buying 1 mill properties and just above are better off! you used to pay 5% on the whole lot. Worse off at 999,999 though.

That's really unfortunate Walcatz, is there nothing to be done to salvage the deal? Would the sellers not accept a price £50k less? Or Could you speak to your mortgage provider and see if they can add it on to your mortgage?

Oh sorry, thought you were due to complete, but read properly now, so you haven't exchanged yet.

No. They benefit you by allowing you to live in London. An option not available to most people these days.

And before anybody comes up with the usual bleat "but we have to live here because our jobs are here" maybe give a thought to how it must be to live in areas where jobs are far between and certain careers options virtually unknown. And to be unable to move to the areas where they are to be found.

Price rises also benefit you as mortgages are cheaper with increased equity.

I think you're confusing stamp duty and the (non-existent) proposed mansion tax op.

A) Londoners have benefitted hugely and surprisingly with recent price rises

Defending that post of mine- Mostly they have! Any Londoner downsizing. Any Londoner moving out of London. Any Londoner selling and moving into rented. The only Londoners it doesn't benefit are those upsizing in London. And it's neutral for Londoners planning on staying on their current property.

Walcatz

That is hard. Is there anything that can be done. Will the Vendors move on price at all?

Walcatz I don't relish what has happened to you and it is harsh that you have lost out - I am genuinely sorry that this has happened to you.

But even you seem to agree that it is a fairer system for most people.

irregular#
Actually those buying 1 mill properties and just above are better off! you used to pay 5% on the whole lot. Worse off at 999,999 though

That is wrong. I am not sure what calculations you are using but they are not the same as anyone elses.

The neutral point between the old and new system is 937K - above that you are worse off and below better off.

And I absolutely agree there should have been a grace period for anyone already in the buying process.

Will mean house prices for my type of house will go up round here in the West.. There is that natural boundary of £250k.... Our house - and many others round us are "worth" around £260-£265K - none sell for more than £249,995 - they will now... so if we sell and move up we will get more for our house AND we will pay less stamp duty on the next "size" up.... AND the kids will pay less for airline tickets to go on holiday, AND ISA's are now inheritable without removing them from the tax free zone

Quids in.. Tory's are aiming at we "affluent" middle Englanders just before the election -

Who'd'a thunk it...?

Amazing watching the Tories furiously swivelling before the election rolls round, isn't it NoLonger

just looked at a stamp duty calculator, and wow, youre right Walcatz,
www.hmrc.gov.uk/tools/sdlt/land-property-results.htm?dates_Transaction=13%2F12%2F2014&moneyResidential=1950000&moneyNonResidential=0

Total SDLT due 147,750
under the old system 97,500

your sellers not able to take a part of that for you?

I would suspect that the increase in stamp duty will come off the price - thereby making buying in London as an investment more unattractive.
If no one can afford to buy at a certain price, prices come down. It is supply and demand and people investing in London property have been skewing the demand.

Same principle applies to HB caps in London. Landlords can only charge what they can get. If HB tenants can't afford to live somewhere, then lower paid, non benefit recipients are going to struggle to afford to pay too. Eventually when there is no-one who can, the prices will come down.

And the London/SE prices are having a knock on effect for the rest of the country. House prices here (NE Scotland) are much lower than in the SE, but have seen a considerable increase (tripled) in the last 10-15 yrs (I should be rubbing my hands together in glee -but I'm not). Wages here are also a lot lower. Hence many people are struggling to be first time buyers. That increase has been driven in part by people relocating out of the SE/buying them as holiday homes.
This is a good few years ago now, but in a village nearby one of the nicest houses came onto the market for £175,000. Talk in the local pub was all about how expensive it was, they'd have to drop the price etc. No one locally could afford it at that price. It was bought almost immediately by someone who had relocated outside London - as a holiday home. Cash purchase using the extra money they had made on their London property sale. The buyer turned up in the pub talking about how they couldn't believe how cheap it was, a bargain etc. They were lucky they they weren't lynched.
Similar in our village - looking to move we looked at a house on an estate of about 12 houses, average family sized houses, did have fantastic views (most houses here have those) but nothing special. Asking about the neighbours out of those 12 houses, 4 were empty most of the year. 3 holiday homes and one a golf enthusiast had bought as a base when the open was staged locally. 'It was so cheap that it made sense to not have to worry about finding accommodation every few years and was also as an investment.'

What kind of message is that giving to the people who live here who can no longer afford a house for their family. The sooner the London house price madness comes under control the better...

Thank you for all of the lovely messages!

I think I'm going to see if the seller will meet us half way on the 50k... it's so tight financially though...

Sorry, I got busy.

Just to clarify, I was aware of the stamp duty rules. I never said my neighbours house was worth exactly 1 million. I am guilty of the flippant use of a million pound house, when I should have written a million plus or been more precise with my calculations.

I believe, 1.5 million would be roughly 90K in stamp duty. It just shows how ridiculous the market is, a house that was 1 million a few years ago will now be worth 1.5. That's an extra 50k in stamp duty (roughly) if they want to move within London.

But I would hope some people can see that if prices keep increasing at the levels they have, then many more people will be into the upper bracket. People buying their homes 10 years ago would never have thought they'd be worth 1 million so quickly. I think it will unfairly hit Londoners who need to move home locally, especially long term.

Adding 100k to a mortgage in order to pay a tax will not be something many people do without a lot of thought. I should think family houses in many areas in London will not be moving quickly.

Walcatz

I feel for you and hope you fine a solution with the sellers.

good post Unlucky - i think that empty homes / holiday homes / 2nd homes should have a higher council charge rather than a reduction. After all they might not be taking from the local economy, but they sure as hell arent adding to it - make them less attractive, and then 'local' people will have more of a chance of living near where they grew up if they want to

unlucky

I hope you're right but if you are selling and buying you'll still get hit won't you.

I mean the stamp duty is an additional cost so if the purchase price reduces then as a seller you will get slightly less, then pay slightly less for your new home but you still have the stamp duty to pay.

But I really do not think people realise how little house you get for £900k.

indeed. It's funny visiting friends who live out of town. Houses are so big and inexpensive!

that gets you 1500 sq ft in my neighbourhood, and that will be a bargain.

1500 sq ft is nearly double the average UK house size.

I think everyone realises how little house you get in London for your money. It's just that nobody is forced to live in London. If you sell your £1m house in London and buy an equivalent house in Birmingham (or even in the surrounds and commute in to London for work) you are quids in.

As I have said before on many a thread about house prices and salaries and how "its not fair", life isn't fair and thats just something you have to get used to.

Agree with Lucky - if it does something to stop the house price madness it helps us all.

Of course that might be a problem for all the estate agents who have been fuelling economy 'growth', but some you win, some you loose. Maybe we can have economy based on added value, not speculating...

DM states: The incredible shrinking houses: The average new British home is now just 925 square feet barely HALF the size they were in the 1920s

Telegraph states: average, three-bedroom house - about 1,200-1,300 square foot