What You Need To Know About UK Stamp Duty Rates 2013
Currently, the sale of residential properties are stamp duty free up to the value of £125,000 – but after that value the stamp duty starts to rear its rather ugly head on the purchasers balance to pay list.
It’s charged at a rate of 1% tax for properties between £125,000 and £250,000.
As house prices have risen, more people are subsequently paying the higher charge of 3% which is attached to properties worth between £250,000 and £500,000.
Higher value properties are charged valued over £500,00.01 and up to £1 million are charged at 4%, its a whopping 5% in the range of the £1,000,000.01-£2 million bracket and an eye-watering 7% for £2,000,000.01 million+ properties.
The average price of a property in greater London is £454,644 based on a BBC article I read back in June, therefore increasing the costs of purchasing by approximately £14,000.
Despite the frightening figures that stamp duty can amount to, the fundamental thing to take heed of is that you have a mere 30 days from the date of completion (when all the contracts are dated and signed) to pay for your stamp duty . You risk a fine and interest on top of your stamp duty if you don’t adhere to the time constraint attach to the payment of stamp duty.
Some mortgage lenders allow you to add the ever-so large lump sum to your mortgage borrowings, however by doing that you’ll pay back far more as the interest will grow on the sum added to your loan over the term of your mortgage.
An example of the implications of adding your stamp duty onto your mortgage:
If you required a £220,000 mortgage to pay for a house that was being purchased at£300,000, but wanted to include the stamp duty, you’d need to to arrange borrowing of £229,000 (or £9,000 additional on your mortgage).
Over a 25 year mortgage term at a rate of 5% the extra £9,000 borrowing would cost approximately £7,000 in interest! (www.which.com)
Both ways, stamp duty can easily set you back the price of a new car. And, it gets worse if you pay it off over the term of your mortgage “but in this world nothing can be said to be certain, except death and taxes” pertinently said by Benjamin Franklin.
As pessimistic as it sounds, it’s also very true.
Darien Neavin – Sales Support / LinkedIn – Darien Neavin / firstname.lastname@example.org