Research by lettings and estate agent, Benham and Reeves, has highlighted the varied levels of stamp duty payable by both domestic and foreign buyers across the capital..
With the stamp duty holiday still in full swing, those completing on a transaction within the capital are still due to save a considerable sum, regardless of whether they are UK nationals or purchasing their first property or a secondary home.
UK First and Second homebuyers
Currently, the average domestic homebuyer completing before 1st July of this year is due to pay just £5,015 in stamp duty when buying across inner London (£600,310). The average outer London house price currently sits at £450,618, meaning homebuyers purchasing across the capital’s peripheral boroughs are still due to pay nothing in SDLT tax, should they complete in the next two and a half months.
On purchasing a second property, the SDLT owed does increase but there is still a saving to be made. For the average homebuyer purchasing a second home in inner London, the tax payable is currently £23,025 on the average property price of £600,310, falling to £13,519 owed across outer London.
In both instances, a current purchase in inner London would see both first and second home buyers save the maximum SDLT holiday saving of £15,000, while those in outer London would pocket a saving of £12,531.
Come July, this saving will be largely removed, with SDLT owed on a primary purchase sitting at £17,515 in inner London and £10,031 across outer London. While for second home buyers, SDLT owed on the average inner London property will increase to £35,525 and £23,549 across outer London. When the holiday finally does finish at the end of September, the stamp duty tax for both primary and secondary homebuyers across all areas of the capital will increase by a further £2,500.
The recent introduction of a two per cent stamp duty surcharge for foreign buyers means that the stamp duty currently owed on any purchase is higher than domestic buyers, despite a saving still being made via the SDLT holiday. A primary purchase would see foreign buyers currently pay £17,022 across inner London falling to £9,012 across outer London. On a second home, this climbs to £35,031 across inner London and £22,531 for homes in outer London.
Despite this higher cost, the current London market presents a great opportunity for foreign buyers at present. Like the domestic market, the average stamp duty bill is due to climb by £12,500 across inner London and £10,031 across outer London come 1st July, with a further increase of £2,500 coming from 1st October.
Finance Director at Benham and Reeves, Vidhur Mehra, commented:
“With different tax thresholds depending on the nationality and buying position of homebuyers, as well as the staggered rates and timelines in place to secure a stamp duty saving, homebuyers across London can be forgiven for feeling a tad confused.The good news is that there is still a considerable saving on offer for both domestic and foreign buyers although this is substantially higher for those completing before the first phase of the extension expires. So it’s understandable that many will want to complete before this initial phase ends to maximise their budget in the current market, particularly non-UK buyers who now also have the addition of a two per cent surcharge to contend with.”
To take the headache out of the stamp duty timeline and cost for London homebuyers, Benham and Reeves has launched their own comprehensive SDLT calculator – www.benhams.com/calculator/stamp-duty/