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Stamp Duty Changes; Implications for Investors

On the face of it, the changes to SDLT in yesterdays Autumn Statement will be good news for all buyers of property under £925k and this should have benefits for clients looking to invest in Oxford. Sadly, however in such a hot market, it is likely that sellers will simply add the differential to the asking price and the money will end up with the vendor feeding house price inflation. If the vendor is an investment landlord of course, some of the money will end up back with the treasury as CGT.

So what will be the outcome of these changes? There can be little doubt that transaction volumes will increase (at least for the next six months or so) especially in the North and in areas where property values are close to average. House price inflation will be fueled, and this may lead to "feelgood spending" in the run-up to the election. If I was being totally cynical, I might propose that the increased tax on property over £2m is targeted at the mainly overseas buyers who are hoovering up Prime Central London and that this will sit well with the more xenophobic voters who might otherwise have jumped on the UKIP bandwagon. All in all then a very clever move in the run up to the election; heading off as it does the pack calling for a mansion tax. Below is a quick guide to the changes.........for a more detailed "ready reckoner" HMRC have a tool.

At a glance:

The old ‘slab’ system:

0% on properties up to £125,000

1% on properties from £125,001 to £250,000

3% on values between £250,001 and £500,000

4% on properties between £500,001 and £1m

5% on properties between £1m and £2m

7% on properties above £2m

The new system:

No SDLT payable at all on properties up to £125,000

The first £125,000 on properties to be free of SDLT

Then payable at 2% payable on the portion up to £250,000

Payable at 5% on the portion up to £925,000

Payable at 10% on the portion up to £1.5m

Then payable at 12% on the portion over that amount.


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Illustrations by: Eleanor Greenhalgh