Stamp duty changes and an anti-speculation property tax are the main taxation measures being introduced to deal with the house price crisis. The stamp duty measures, effective from midnight last Wednesday, are largely aimed at making second-hand houses more affordable for first-time buyers.
Stamp duty exemption limits have been increased. The duty rates for first-time buyers and existing owners buying houses costing up to £300,000 have been reduced, with significantly bigger reductions for first-time buyers. To qualify for the lower rates, buyers must be owner-occupiers.
But people buying houses costing between £300,000 and £500,000 will pay more stamp duty. And anyone other than an owner-occupier buying new or second-hand residential property will face significantly higher stamp duty, with a new flat rate of 9 per cent. This will mean stamp duty of £9,000 on a £100,000 house or £13,500 on a £150,000 house.
The house price exemption limit - before any stamp duty is payable - of £60,000 is being increased to £150,000 for first-time buyers and to £100,000 for existing home owners, as long as the property is bought for owner occupation.
For a first-time buyer paying £100,000 for a house he or she will occupy, this will mean a saving of £3,000. This increases to £4,800 on a £120,000 house, £6,000 on a £150,000 house and £4,000 on a £200,000 house. The maximum saving will be £7,500 on a £300,000 house. Stamp duty will rise for houses costing more than £300,000. On a £350,000 house, a first-time buyer will pay £26,259, as against £24,500 before.
Existing house owners buying as owner-occupiers will save £3,000 on a £100,000 house, £1,200 on a £120,000 house, £1,500 on a £150,000 house. The saving on a £200,000 house will be £2,000, while there will be a £3,000 saving on a £300,000 house.
The change in bands means there will be no saving on houses costing between £150,000 and £170,000, which will be still taxed at 4 per cent and houses costing £200,001 to £250,000, on which stamp duty remains at 5 per cent. The £250,001 to £500,000 stamp duty band is being split into two bands. On houses costing between £250,001 and £300,000, stamp duty is being cut from 7 per cent to 6 per cent for existing owners, and to 4.5 per cent for first-time buyers. But on houses costing between £300,001 and £500,000, stamp duty will rise to 7.5 per cent from the 7 per cent rate. Stamp duty on all houses over £500,000 remains at 9 per cent for all buyers. But the new flat stamp duty rate of 9 per cent for investors and buyers of second or holiday homes - anyone other than owner occupiers - may discourage some of these buyers. Stamp duty on a £250,000 house will increase by £10,000 to £22,500. On a £150,000 house, the duty will be £7,500 higher at £13,500, while the duty on a £100,000 house will rise by £6,000 to £9,000.
In addition, non-owner-occupiers face an annual tax of 2 per cent on the value of residential property that is not their private residence. Effective on residential property acquired from yesterday, this tax will cost £3,000 each year on a £150,000 house.
But owners who meet Department of Environment registration standards for landlords will be able to avoid this tax (see panel). Other properties to be exempted from this tax include residential investment under Section 23, the Town, Rural and Urban Renewal Scheme and rented residential properties under the Seaside Resorts Scheme, heritage homes and rented holiday homes.