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?

they Already own a home in the area, they are just looking to move.

Thanks all for your messages.

We aren’t that old. Our children are still little at the moment, but they will grow and that’s when the space would be useful.

It looks like stamp duty was a non issue not that long ago, the rates have ballooned over recent years and the thresholds haven’t been increased like house prices.

I’m 34 and my house price has increased £100k (30%) in 5 years. I’ve hardly benefited from the halcyon days of property booms but most houses will have increased in equity value enough to meet stamp duty on the next purchase.

Also it’s a fair point about all the other costs too. It all adds up to one damn expensive move.

I think the temporary stamp duty cut is being reversed too? I think that will add a few thousand to almost all purchases.

@Ffsman wasn't that for first time buyers only? And only applied to houses under a certain price - which basically doesn't apply to most of London?

Most people’s houses haven’t increased by 30% value in 5 years though.

House on my street sell for the same I bought mine for three years ago.

We bought a do-er upper on the basis you don't pay stamp duty on cost of renovating.

No but HPI says average is around 25%, so most people will more than cover the stamp. I also have a property that I used to live in that has dropped in value 100% so I get not everyone wins - but on the whole, you can pay your SDLT on a second purchase from untaxed income…

Average home in the UK has increased 25% in five years? That sounds unlikely. And very much not the case in London / South East where people tend to attract these really silly stamp duty rates.

And your previous property has dropped in value 100%… so it’s now worthless?

Note we are talking about stamp duty rates of upwards of 12% and often a five or six figure sum.

I'd just stay put in your position. And find other ways to make life comfortable.

We're in London zone 2 and stamp duty is eye-watering here. We thought long and hard about our location when we moved, as we are planning not to move again until the dcs have finished secondary school (youngest is in nursery now). We bought a 4 bed house for our family of 5, so it will meet our needs for size, and we have an excellent primary 5 mins walk away and a top secondary 20 mins walk away (with private options a bus ride away, if it becomes less desirable in future). We have amenities for younger kids like great parks and leisure centres, but also a good high street and proximity to venues, cinema and transport for teens. Stamp duty was a factor in wanting to find a place that would meet our needs for 16+ years, but to be honest we also wanted to avoid the hassle of buying/selling, the upheaval of moving, and just having family memories in one place. Our first property was a 2 bed flat and this is our second (we were able to make the jump after selling stocks which had increased in value - no inheritances or family handouts, and no huge increase in equity).
It doesn't make sense for us to do a sideways move anywhere, unless we really had to move for work or something like needing to be close to a hospital.

What?

It looks like stamp duty was a non issue not that long ago

I seem to remember it being of the order of hundreds of pounds, when it really was 'stamp duty' (more like an admin charge on legal documents). It became "Stamp Duty Land Tax" in 2003.

The Land Registry data shows an average house price of £232k in October 2019, and £292k in August 2024 (https://landregistry.data.gov.uk/app/ukhpi/browse?from=2019-10-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Funited-kingdom&to=2024-10-01&lang=en), which with a bit of rounding is 25%.

And yes, my property is unsaleable and unmortgageable and the latest survey valued at £0. It’s a clad flat.

Asnin you buy a cheaper house, and then you aren’t paying 12% tax on the cost of the work because someone else has done it.

So buy a £1.2k house and it’s £63k stamp duty. Spend £300k on work.

But if you buy a £1.5m house it’s £91k stamp duty.

Etc

@MidnightPatrol yes well I understand that but the person posting suggested there was no stamp duty payable on a house that requires renovation.

What a twattish post!

did it make you feel good about yourself?

The thing about stamp duty is that it was reformatted in 2003, prior to that it was a 1% property tax on purchase.

So the percentage was lower as were the properties. So 1% on £75k flat (my first property) was a very different ballgame. As was 1% on my second property in 1997.

Since then property values have increased significantly and the percentage rate has also increased. Hence where we are today.

So for instance a £1.5 million property previously would have delivered £15k in property tax, but now delivers £91k. But by the same token a £1.5 million property in say 1997 would have been some serious property not a fairly decent semi detached 4 bedroom house in many London postcodes.

There was an interesting study on the housing market a while back, I think by LSE - and it cited stamp duty rules as one of the reasons that many older people are staying put in large houses and effectively blocking young families from accessing those homes. Some of the responses on this thread very much back that up. If you want to move pretty much sideways to a smaller and more accessible bungalow in an area that happens to be more expensive, for example, spending perhaps £30-40k in some areas to do that will stop many people from considering it.

The whole system needs a complete rethink. Even basing it on the differential sale and purchase price would help. We’re another family in an area which has rocketed in value meaning that a modest step up would mean we’re spending a figure which seems laughable (but luckily for us we’d be also selling for most of that price!) It’s the resulting stamp duty which means we can’t bring ourselves to make that jump and probably never will tbh.

This is so true. We live in a 5 bed and I really want to downsize now DS has moved out, and DD probably not far behind. DH still wants a garage and reasonable sized garden, but in order to get that in a three bed, the price differential between that and what we could get for ours, less stamp duty and other fees, means we wouldn't free up any money. So you effectively get less for the same money. We are in the south, not south east.

@Papricat As an older owner, I didn't choose for my house to go up in value. I don't see how I can be held personally responsible.

I've also spent £100k bringing my house up to standard in terms of insulation and efficiencies (new wiring, new roof, insulation). Surely we WANT people to modernise our (in some cases) hugely inefficient housing stock.

But I'm now in a situation where downsizing isn't financially worthwhile when I take stamp duty, other moving costs, any necessary spend on a new home and general disruption to my life in to account.

It's a stupid tax that adds unnecessary friction to the housing market. People find it difficult to move or downsize because of it.

All of our politicians lack the ability to devise and introduce an alternative.

I would scrap it and, after a warning period of 5 years to allow people to rightsize, introduce an annual tax based on the home value.

I agree. It puts so many people off moving. They could definitely increase taxes on the property, so that people in high value homes pay a lot more and people in lower value homes much less. That would be more fair, encourage downsizing and free up more family homes. They would need to do some planning and building to ensure that there are enough homes at 2/3 bedroom level. As you say, @XVGN, none of them want to tackle this so they mess about around the edges and achieve nothing.

I wonder if there could be a discount or incentive to downsizing. Not sure that would work but fewer square foot or lower value?

I guess some would benefit in that they might go on to extend or whatever but it would still free up properties?

That's the kind of smart thinking that our politicians are incapable of.