Buying a property will, like many things, become more expensive next year as new taxes grab the market by the throat. VAT increase on the transaction costs of buying and selling will jump 2.5% in the New Year as VAT leaps to 20%.
Based on the sales in the last 12 months and using the Land Registry statistics around 87,000 homes will sell in London. The new VAT rate will add an additional £10.4m on the fees charged by estate agents to sell these homes while the extra tax on conveyancing, removal, decorating etc. could see this additional tax contribution double to nearly £20m.
Later in the spring, the last Government's answer to the Mansion Tax is still lurking out there. Across England and Wales, a total of 6,472 paid over £1m for a home in the last year according to the Land Registry. From 6th April next year, the Stamp Duty payable on homes over £1m rises by 25% to 5% of the purchase price. In London where average values are considerably higher, this additional tax will push the cost of buying a home close to 10% of the purchase price! Again, using the sale prices and volumes over the past year published by the Land Registery, this will raise an extra £61m from the 4,007 £1m+ London buyers.
In total, London buyers paid £308m in Stamp Duty Land Tax whilst home sellers in general in London paid estate agents just over £415m in selling fees.
“These additional costs will make some people stop and think” says Simon Godson. However rich you are, there will be some who find the total cost of moving just too much. “Falling prices may make property cheaper for buyers but the additional VAT and Stamp Duty could result in a rush of homes coming onto the market in the New Year and a flurry of deals to try and beat the April deadline."
Useful link HMRC
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