Ridiculous stamp duty costs

[Ffsman]

No stealth boasting, one upmanship etc. and I know it’s first world problems.

We have a relatively expensive house, but only because the area is expensive, it looks very average and truly unremarkable. I don’t actually earn that much, the house is certainly more than 5x our join salaries.

We’d like to move, but the stamp duty amounts are horrendous, above around 900k it really goes up and above 1.5m and you’re paying 12%.

We’d like to move slightly out, around 15-30mins walk from the city centre which will give us a little more space, price will be around the same as ours give or take a couple of hundred thousand.

I’m struggling to come to terms with just how much we’ll lose in stamp duty.

The people in my position, did you just do it? Stick where you are? Etc

Also I can’t afford to keep moving, one bad neighbour who makes our lives hell and we are screwed.

We have no realistic option to extend our current house. Its city centre and the plot is good but small.

Any thoughts?

Annoying neighbours are always a risk in suburbia. The only way to avoid paying stamp duty is to rent yours out and rent somewhere else yourself.

We sucked it up, unfortunately. We didn't really feel we had a choice to be honest.

I think if it wasn’t for stamp duty the prices of the houses themselves would just go up accordingly to be honest - which doesn’t help you, sorry

But the house you are selling would also increase so the price difference stays the same. It's why home owners don't complain about prices rises, their is still 100k between our house and our next house regardless of the cost of each one

You tend to find the percentage increase is the same so it isn't that every house increases by 100k - if the middle one increases by 100 the one at the bottom only goes up by 50 and the one at the top by 150

we are more looking at a sideways move rather than trading up in value.

Did it hurt and does it still?

I think I’d cry like a baby paying it.

But maybe when the children get bigger it will push me.

I guess that if houses were subject to CGT, you'd have to pay a lot more for the increase in your asset. Can you see it as a similar thing?

Or just decide that you can't afford it. Plenty of us in that boat!!!

its so true and such a big gamble

renting is not a bad idea although might have to pay CGT on the sale of the house in future

Not the same but I can't sell my house so am renting it out to move. It's all well and good as rental yield is easily 200% of the mortgage and my tenant is known to be and a very safe bet.

But the budgetary change to second home stamp duty has broken me financially just shows what a couple of % can do!

It's put me off renting out an inherited property tbh- wrangling with my brother over that one!

Yep, it's a big consideration when moving. You spend X on a house and you have an asset worth X, but the stamp duty is a big minus figure on your net worth, so by the time you add up estate agent's fees, conveyancing fee, removals costs and stamp duty it does make you reconsider, because there's nothing to show for it. We moved 18 months ago, and took a big hit (we're also in an expensive area).

We are looking at moving from a house worth a similar amount.

£900k house: Stamp duty £32,500
£1.0m house: Stamp duty £41,250
£1.1m house: Stamp duty: £51,250

London so the houses for these prices are not very impressive.
Of course this tax would come out of earned income which is heavily taxed too.

So staying put.

If you're moving out of town so it's cheaper, just stick the stamp duty on your mortgage. You won't notice it that much, especially when interest rates come down and you can get a lower rate

It’s a good point that it will be paid from heavily taxed income!

and then it really ramps up, as an example:

@£1.5m = £91k
@£2.5m = £211k

I think you have to look at it in a different ways!
For example you are very fortunate that you can afford this move, millions of homeless people would love your problem.
Another example is that you are very probably going to have to pay inheritance tax if you own a property of that cost in the South East, so in fact you are reducing that inheritance bill now by paying this stamp duty from your income now.
Anothervexample is to work out how much your house has increased in value since you started on the property ladder.
Finally I do believe if stamp duty rates were reduced or cancelled then houses prices would just increase anyway.

we are so penalised in the South East! I live in South East too and haven’t moved for 34 years and don’t intend to. Probably stamp duty is a reason for it.
I now think and this is a very recent thought is that don’t buy that huge house cos some day you will nee£ to downsize and again more stamp duty and desruption and stress.

Stamp duty taxes definitely put lots of people off moving, without a doubt.

Don't mean to derail the thread with politics but this is why any/all governments are always very keen to "stimulate" the housing market and support the first time buyers at the bottom, while simultaneously never moving stamp duty thresholds upwards. The higher prices in general rise, the more people that land in the high tax brackets.

If you are higher rate tax payers, or the rent received on a property makes you into higher rate tax payers (and assuming you have a mortgage) then mortgage interest is not fully deductible as an expense.

E.g. you pay 40% tax on your mortgage interest and receive a 20% credit back - effectively paying 20% tax on your mortgage interest.

This can mean even if the rent only just covered an interest only mortgage a tax bill would be due. E.g. a £2000 interest only mortgage and £2000 rent payment received each month for higher rate tax payers would mean a £4,800 annual tax bill. (Not accounting for other deductible expenses like insurance and maintenance). That's (2000 x 12) x 0.2 (the 20% tax).

It's important to understand this if you have a mortgage and rent the house out.

Thank you everyone. It’s super helpful.

Its most frustrating as we aren’t looking to go up in value, just keep around the same price, a house that would better suit our family.

The stamp duty cost would be over 4x my salary after tax!

Working four and a half years to pay our stamp duty bill.

Can you extend at all?

Realistically not. It’s already as big as it can be.

Can’t go up, to the sides or behind. a basement might be an option but will also be expensive and we have a high water table.

It's an odd tax. It deters people moving sideways, down or area when they might have legitimate need to.

It sort of presumes everyone is moving once into a better place because they are wealthier than they were.

You basically have to suck it up, or stay put, or rent.

The stamp duty cost would be over 4x my salary after tax!

If this is the case then you've either inherited a huge amount, gained a lot of equity from price rises or have a very wealthy partner.

You should probably not be living there if you can't even afford stamp duty! Leave your place to a young professionals couple that will be able to make the most of the area.

Stamp duty in London and the SE is eyewatering I agree. It's why so many people extend as the first option. It's also a big factor in why those that can afford to jump straight into a house further out will do so now rather than pay the stamp duty on a flat that they will out grow.

It's just one of the costs that has to be factored into the purchase price.

I think as well it focuses the mind on how valuable a sideways move is and whether it's actually worth the cost for whatever gain. For very little gain is it actually worth it?