The Nationwide Building Society has claimed that changes to the Stamp Duty Land Tax (SDLT) announced in the Autumn Statement may help stimulate housing market activity.
The slab structure was completely abolished, with purchasers paying the marginal tax rate on the relevant elements of the purchase price. 98% of buyers will pay the same or less tax; only those purchasing homes costing between £937,500 and £1,000,000 or more than £1,125,000 are set to pay more.
The Nationwide said the new marginal SDLT should help to remove the distortions caused by the slab structure, which led to a clustering of transactions. The greatest impact is likely to be for homeowners looking to buy property just above £250,000, who could save around £5,000 in tax (or c2% of the purchase price).
Based on 2013/14 transactions data from the Land Registry, nearly 590,000 purchasers in England & Wales would benefit under the new regime, with an average benefit of around £1,600. Using this data the Nationwide was also able to examine the impact of these changes at a parliamentary constituency and government office region (GOR) level. The average SDLT paid is expected to be lower in 97% of constituencies under the new system.
It said the benefits tend to be greater in areas where average house prices are higher and thus a higher proportion of transactions are liable for stamp duty. We estimate that 86% of transactions in London and the South East government office regions would benefit from the changes, compared with around 50% across the North East, North West, and Yorkshire and The Humber.
The London region sees the highest proportion of transactions benefiting, but also the highest proportion paying more stamp duty. This reflects that house prices in the capital are substantially higher than elsewhere, meaning almost all transactions in the capital are liable for stamp duty.
Only a very small proportion of purchasers in England & Wales will pay more stamp duty under the new system and the majority of these are in London. Nonetheless, most people buying property in London will benefit from the changes (an estimated 100,000 would benefit based on 2013/14 transactions), with only those buying properties above £937,500 facing a higher tax bill (an estimated 8,400 would pay more tax in London).
A marginal system should also help to remove the distortions caused by the previous thresholds, which led to a significant bunching in transactions, the Nationwide said.