Stamp Duty

Tax on buying property

Stamp duty land tax (SDLT), as it is officially known, is charged as a percentage of the price paid for a property. It replaced Stamp Duty in December 2003 and is a tax on the purchase price of land and buildings. When you buy houses, flats and other land and buildings you may have to pay SDLT.

In recent years, stamp duty bills have increased as the thresholds have not kept pace with the housing market. The higher stamp duty bands have not been changed since they were first introduced more than a decade ago.
You don't have to pay any SDLT on a residential property costing £125,000 or less. Above this amount you pay between 1 per cent and 4 per cent of the purchase price.

You can only avoid stamp duty if your new property costs less than £125,000, or up to £150,000 in certain "disadvantaged areas." Otherwise, you must pay 1 per cent of the purchase price on properties between £125,000 and £250,000, rising to 3 per cent on properties costing between £250,000 and £500,000. Above £500,000, you have to pay 4 per cent of the price.

Few purchasers can escape the stamp duty net, and the hefty bills can hit first-time buyers particularly hard.
The chancellor Alistair Darling made one minor concession in his first Budget speech earlier this year which affected shared ownership properties. These schemes allow people who cannot afford to buy a home outright the chance to buy a share of a property, while paying rent on the remainder. They are typically open to council or housing association tenants and key workers, such as nurses and teachers.

Stamp duty is now only payable on shared ownership properties when buyers own 80 per cent or more of the equity in their home.

The 2007 Budget announced that relief from SDLT for zero-carbon homes would be introduced from 1 October 2007.  All qualifying houses under £500,000 are exempt and houses over £500,000 have their SDLT bill reduced by £15,000.

A zero-carbon house must be ‘zero carbon’ over the course of the year. The house can be connected to mains electricity and gas but needs to have sufficient additional renewable power to cover the average consumption of a house over a year.

In order to achieve this, the fabric of the building has to be insulated and built to very high standards and the house needs to incorporate renewable energy technologies.