VERNON WELCOMES STAMP DUTY CHANGES

Local mortgage lender Vernon Building Society has welcomed the changes to stamp duty which mean that 98% of homebuyers purchasing a home will pay less.

The mortgage industry has lobbied for a change in the current system for many years, however the announcement in the Chancellor’s Autumn Statement still came as a surprise.

The duty was previously payable on the full purchase price of a house with higher percentages applied to higher value properties. It has long been considered unfair because as you moved into a new band the tax was payable on the entire price of the house-not just the amount that was over the band threshold. This meant that when a property went into a new stamp duty band, even by a small amount, the tax payable increased significantly.  It also meant that houses for sale were often priced with stamp duty thresholds in mind, leading to artificial ‘cliff edges’ in property prices priced at certain stamp duty bands.

Under the new system the duty is calculated in a similar way to income tax so that now if a property goes into a higher stamp duty band the higher percentage is only applied to the amount above that threshold, leading to a smoother, graduated system. The new bands for different property values are:

£0 to £125,000:                       0%

£125,001 to £250,000:            2%

£250,001 to £925,000:            5%

£925,001 to £1.5m      :           10%

Over £1.5m:                            12%

On a property with a purchase price of £155,781(the average cost of a home in the North West according to the National Housing Federation), a buyer would pay around £616 in stamp duty as opposed to £1,558 under the old system.

Head of Sales and Marketing at the Vernon, Ian Keeling, said:

“This is a very sensible move by the Chancellor as it will help many buyers financially and also correct the distortions created in house values by the old system.”

Vernon Building Society has mortgage advisers based at each of their local branches and offers special incentives on selected mortgage products for buyers within a 25 mile radius of Stockport.  For more information or to make an appointment at your local branch visit www.thevernon.co.uk