Introduction of Stamp Duty Land Tax (SDLT) is a fair move but some homeowners in London and the South East will suffer, says Stephen Hemmings, director at Menzies LLP:
"From tomorrow, Stamp Duty Land Tax (SDLT) on residential property will be charged at a progressive rate. This is more equitable than the previous system where the entire value of a property fell into the highest banding rate, inevitably causing a distortion in the housing market.
"Whilst it would seem that purchasers of residential property will pay less stamp duty than they did previously on property at the lower end of the valuation spectrum, more expensive housing will be subject to a higher SDLT tax. For example 10% will be charged on property portions over £925,000 and then 12% on portions over £1.5 million. The previous rate for properties valued up to £2 million was only 5%. Our initial calculations indicate that someone paying more than £937,500 but up to £2 million for a property could be paying over 50% more SDLT, depending on the transaction value. The old and new rates are very similar just above the £2 million value, but then SDLT accelerates at a higher rate again under the new regime. Inevitably this will have a disproportionate impact on house purchasers in London and the South East.
"As the new rules take effect from tomorrow, solicitors in the South East are likely to have a busy night exchanging on properties before the rule change."