What is Stamp Duty? – Updated for 2019

stamp duty

Stamp Duty Land Tax applies to the transfer of ownership on land and property in the UK that meets certain conditions. Over the years the rules have changed, but we’ve compiled this guide to give you the most up-to-date facts.

 

What is Stamp Duty? – Updated for 2019 Aspen Woolf

What is Stamp Duty?

When buying property in the UK it is important to be aware of the tax requirements that come with such a purchase and continued owning of that asset. In England, Wales and Northern Ireland, tax on the sale of property is known as Stamp Duty Land Tax (SDLT), often shortened to Stamp Duty (in Scotland you pay Land and Buildings Transaction Tax instead). Not all property is subject to stamp duty, as it is dependent on the value of the property. There are also different rates that apply depending on whether the land or property is designated as residential or non-residential.

Currently, the thresholds above which stamp duty is applied are:

  • £125,000 for residential property
  • £150,000 for non-residential property

Any property transaction under those thresholds won’t incur stamp duty, but any sales over those points will be subject to stamp duty at a certain rate. Similar to Income Tax, rate applies only to the the value of the property above those thresholds. So if your residential property is valued at £250,000, you will only pay stamp duty on £125,000.

There is also a higher rate of Stamp Duty for property purchases if you already own a property in the UK and are purchasing an additional one i.e. a buy-to-let property. In this case all property purchases will incur the additional higher rate and will be taxed at a minimum rate of 3%, with the percentage increasing as the price increases.

 

What is Stamp Duty? – Updated for 2019 Aspen Woolf

So what are the 2019 rates and how are they applied?

The rate of stamp duty that is applied to a property sale is linked to the value of the property. The higher the price, the higher the tax.

For non-residential properties, the following rates of stamp duty are applied:

  • Up to £150,000, there is no stamp duty tax applied
  • The portion between £150,001 and £250,000 is taxed at 2%
  • The remaining amount, above £250,000, is taxed at 5%

For residential properties, the rates of stamp duty work out as follows:

  • Up to £125,000, there is no stamp duty tax applied
  • The portion between £125,001 and £250,000 is taxed at 2%
  • The portion between £250,001 and £925,000 is taxed at 5%
  • The portion between £925,001 and £1.5 million is taxed at 10%
  • The remaining amount, above £1.5 million, is taxed at 12%

However, if you are purchasing an additional residential property for £40,000 or more, when you already own at least one other (as is usually the case with buy-to-let properties), they will be taxed at the higher rate of Stamp Duty. For these transactions, stamp duty is applied at the following rates:

  • Properties up to £125,000 are taxed at 3%
  • The portion between £125,001 and £250,000 is taxed at 5%
  • The portion between £250,001 and £925,000 is taxed at 8%
  • The portion between £925,001 and £1.5 million is taxed at 13%
  • The remaining amount, above £1.5 million, is taxed at 15%

Stamp Duty for First Time Buyers

It’s good news if you’re a first time buyer in England or Northern Ireland. You will not have to pay Stamp Duty on properties worth under £300,000. For properties valued in excess of this figure the standard rates apply on the sum above the threshold.

 

What is Stamp Duty? – Updated for 2019 Aspen Woolf

Stamp Duty – An example

So how does that work out exactly? Let’s take the example of a buy-to-let property that costs £275,000 (if you already own one or more properties, and therefore the higher rate of Stamp Duty applies). The Stamp Duty you would owe on this property is calculated like this:

  • 3% on the first £125,000 = £3,750
  • 5% on the next £125,000 = £6,250
  • 8% on the final £25,000 = £2,000
  • Total SDLT = £12,000

Stamp duty is applied equally to freehold and leasehold properties.

So, now you know how Stamp Duty is applied to different property purchases, but how is it paid?

 

What is Stamp Duty? – Updated for 2019 Aspen Woolf

How Do I Pay My Stamp Duty?

Stamp Duty is paid to HMRC, the UK’s taxation department. Whenever you purchase a property of any kind, you must send a SDLT return to HMRC. You must then pay any tax incurred within 14 days of completion – this time limit came into effect as of 2019.

If you are working with a solicitor, agent or conveyancer to complete your purchase, they will usually file your return and pay the tax on your behalf on the day of completion, then adding the amount to the fees they charge you.

However, if you are conducting the transaction entirely by yourself, it is your responsibility to file the return and pay the owed taxes directly to HMRC.

Understanding stamp duty can seem daunting, and naturally you’ll want to ensure you pay the correct amount. But with patience and careful consideration (and the assistance of a reliable solicitor!), it needn’t be a big headache in the property buying process.

 

If you found this article useful, you may also find Is Property Still a Good Investment? and The Difference Between Freehold Vs Leasehold Properties interesting.

Property Prices In Dubai Set To Rise In 2018

Dubai skyline at sunset - Aspen Woolf

It’s that time of year where predictions flood in for the worldwide property market for the next 12 months. This year has been economically uncertain for many regions, due to political and economic uncertainty, but it’s good news for the Dubai property scene, according to industry experts Knight Frank.

Modest Increase In Property Prices

Property Prices In Dubai Set To Rise In 2018 Aspen Woolf

Image credit: Michael Theis via Flickr

While the predicted price increase is modest at 1%, it’s still positive news as Dubai should return to growth, after the recent market cycle showed a weaker performance than average.

Knight Frank say that prices of prime residential property in Dubai should rise in 2018, pointing to a return to growth. The consultants point towards government investment in the infrastructure and economy ahead of Expo2020 as the main reason demand is being driven higher.

Expo 2020 is bringing developments, building projects and more jobs, all of which is helping to strengthen the economy. In addition, it’s increasing demand for residential property in Dubai, as well as commercial, retail and luxury space.

How Dubai Compares To Other Regions

The annual Property Forecast report for 2018 covered 13 cities. According to its analysis, Paris should lead the global price growth for 2018. That’s an increase of 9% in a market that has really struggled to increase prices over the last few years. The expected improvement is due to the benefits from the encouraging economic outlook for the Eurozone.

France’s capital is very much set to be back in the game for global investors, particularly those from Europe and the Middle East.

It looks likely that Singapore (at 5% increase) and Geneva (3% increase) could become next year’s most improved property markets. Market sentiment surrounding Singapore’s luxury residential market is improving. Geneva’s privacy, safety and impressive schools make it a popular spot for wealthy families who want to relocate.

Other Global Regional Forecasts

Property Prices In Dubai Set To Rise In 2018 Aspen Woolf

Image credit: Estatesgazette via Flickr

It looks like Hong Kong will enjoy the strongest growth of the major urban markets in Asia with a 7% increase by the end of 2018. This is due to the continuing demand from mainland China.

Here in the UK, prime prices in London look set to rise by an extremely modest 0.5%, but with a cumulative growth in prices over the next five years reaching 13.1%.

Good News For Dubai

While the growth predicted for Dubai is modest, it’s still extremely encouraging news for investors. With Expo 2020 ever closer, there are more reasons than ever to get involved in property investment in Dubai.

Why Liverpool Is Top For Student Housing Investment                 

Student accommodation is one area of the property market that won't be hit by political uncertainty

One area of the UK’s property sector continues to boom, regardless of the uncertain economic outlook for the country.

Research by Savills shows that by the end of 2017, £5.3 billion will have gone into student accommodation investment. Brexit doesn’t appear to have slowed down investment in this sector, and there has also been a 2.2% rise in applications from overseas students since 2016.

Student accommodation continues to attract much interest from investors, as demand is exceeding supply in most regions. Excellent yields can be made by discerning investors, and the north west of England is proving one of the most exciting areas for opportunities in the UK.

Northern Appetite For Student Accommodation

Why Liverpool Is Top For Student Housing Investment                  Aspen Woolf

The north west of the country as a whole is seeing demand increase for student housing, with Mistoria Group demonstrating that the region was up by 38% year-on-year. And Liverpool is one of the most important areas for investment.

There is a real shortage of student accommodation in a city that boasts many higher education offerings. This has led to a situation where there are excellent yields for investors in shared student accommodation. Areas that are particularly ripe for investment in Liverpool include Wavertree, Toxteth, Kensington and Kensington Fields.

Houses Of Multiple Occupation

It’s possible for savvy investors to buy a high-quality, three-bedroom House of Multiple Occupation (HMO) from around £120,000. Each room can be rented out for an average of £85/week, including bills. Extras like en-suite bathrooms can push the rent up to around £110/week. The ROI (return on investment) is attractive, at around 13%. This splits into 8% cash rental and 5% capital growth.

Experts advise investment in HMOs rather than ‘student pods’ (individual rooms or small pods). These are at a disadvantage when it comes to resale value and potential for capital growth, and are far riskier than traditional larger, shared properties. The investor pool for single pods is much smaller than for HMOs, flats and other types of student accommodation.

Other Areas For Investment

Why Liverpool Is Top For Student Housing Investment                  Aspen Woolf

Image credit: Tim Green via Flickr

The Northern Powerhouse is undoubtedly a strongly attractive region for investment in student accommodation. There are many purpose built student accommodation properties (PBSA) in development, as well as the potential of traditional housing stock, giving lots of choice and opportunity.

Research from Simple Landlord Insurance found that the very top university for investors is also up north – in Scotland. Prince William’s Alma Mater, the University of St Andrews offers yields of up to 12%.

At the other end of the scale, the lowest yields come from Oxford University, averaging at just 3.3%. For example, a property in the main student district costing an average amount of £720,000 only brings in about £2,000 in rent.

Dubai Housing Market Shows Signs of Growth

Dubai has a booming property market, especially in terms of rented accommodation.

There has been a significant shift in recent times in the Dubai housing market, if a recent report is to be believed. And it’s one that should be of real interest to prospective investors, as it shows growth in an area that isn’t usually associated with the super-rich image of Dubai.

Encouraging Figures for Growth

Dubai Housing Market Shows Signs of Growth Aspen Woolf

Image credit: Djordje Radovanovic via Flickr

The research – released by dubizzle Property and real estate consultants JLL in their End of Year Property Report for 2017 – shows that sales leads for properties under AED1,000 per sq ft have risen by an impressive 24 percent in the last 12 months. The findings suggest that it is in Dubai’s mid market segment that things are now really starting to move, with well over half of the residential properties that dubizzle Property are listing falling into this category. It’s part of a wider trend, according to Samer Abdin, the company’s general manager.

“Developers in Dubai announced 16 new projects this year – several of them were in the mid-market segment offering attractive payment plans,” he says. “Agencies who are focused on off-plan sales and have inventory that falls under the less than AED1,000 per sq ft bracket are likely to see gains here.”

The First Signs of a Potential Recovery?

Taking an even wider view, the bigger picture in Dubai also seems to be one of encouraging signs of growth in the mid and lower segments of the housing market. It’s no secret that the property market in Dubai has head into the wrong direction in the past, but it appears that the recovery now may well be on its way.

“This is where I believe the market is extremely undersupplied and not adapted to the demand,” says Salah Belkhayat, managing director of property adviser Valuance Consulting. “The prices in that segment are increasing while the rest of the market is still correcting.”

A Real Opportunity for Investors

Dubai Housing Market Shows Signs of Growth Aspen Woolf

Image credit: Maher Najm via Flickr

The research suggests that paying close attention to the differing trends in the distinct sectors of the Dubai property market is a smart approach for investors.

“The Dubai residential market has remained relatively soft during 2017, while there has been little change in average sale prices, rents have continued to decline in most locations,” says Craig Plumb, head of research, JLL MENA. “This disguises variations between different communities and different sectors of the market.”

While many expats in particular may still be earning high salaries, it’s clear that there are a growing number for whom the top-end properties are a step too far. Many have been looking to rent or buy in neighbouring emirates where prices are lower – but the rising demand for affordable properties in Dubai shows that it is still a highly desirable location.

So, while it seems that the higher end luxury market has struggled in the face of low oil prices and unemployment issues, the more affordable parts of the Dubai property market are now bouncing back – presenting potential investors with a real opportunity to take advantage of a sector where demand is increasingly healthy.

Regeneration of Leeds City Centre Brings Investment Prospects

Leeds City Centre Birds Eye View

Leeds is undergoing a major transformation with regeneration projects being proposed in many different areas.

Capitalising on the popularity of the city as an attractive area for young professionals to get on the property ladder, the regeneration plans will continue to bring in people who have become disenchanted with the prices of properties in London and the South East.

Major Facelift Proposed

The area surrounding New Briggate and the Grand Theatre is a historically important, yet run down part of the city. Dating back to the 17th century, this area was considered the heart of Leeds and might be completely transformed if recent proposals are accepted.

Leeds City Council is submitting an application for the Townscape Heritage Programme, run by the UK’s Heritage Lottery Fund. If successful, it will be used to revamp the retail area around the Grand Theatre.

The Grand Quarter

Regeneration of Leeds City Centre Brings Investment Prospects Aspen Woolf

Initially developed in the 17th century by John Harrison, and further altered in the 19th century to become a leading cultural and commercial area of Leeds, the ‘Grand Quarter’ features various listed buildings.

These include the Grade 1 listed St John’s church and the Grade II listed Grand Arcade, which was designed and built in 1897. More recently, the area was allowed to decline due to under investment in commercial properties and by planning being dominated by vehicle access.

Transformation of Historic Buildings

Only 17% of the buildings are currently considered to be in good condition. The scheme looks to transform the area by matching funding from property owners and the HLF contribution to public area improvements.

This will also link in with the huge successes already enjoyed by the ‘Re-Making Leeds’ Programme, which is providing training opportunities for young people, and creating jobs in the building industry.

Student Accommodation

As well as retail and heritage developments, the boom in student housing is continuing in Leeds. London and Scottish Investments (LSSI) have announced that they’re going to expand into the city with proposals for a 17-storey tower block in the city centre.

The tower block, intended for student accommodation, will be built on the site of an ‘80s office block on Belgrave Street. LSSI plans to knock down the office building and replace it with a 17-storey building to house 325 student beds. They also plan amenities such as a gym, outdoor terrace and cinema room.

It’s another clear indication that the move to Purpose Built Student Accommodation (PBSA) has very much reached Leeds, and offers lots of investment opportunities. This proposed project will sit close to St Albans Place, a 376-bedroom building by developer Vita Student, due for completion in 2019.

Mixed Use Projects

Regeneration of Leeds City Centre Brings Investment Prospects Aspen Woolf

Image credit: Tim Green via Flickr

Caddick Developments has plans to regenerate part of the city centre with a £300 million project. They want to transform the Quarry Hill site (2.4 hectares) into a cultural centre surrounding the City College, West Yorkshire Playhouse and Leeds College of Music.

Named ‘SoYo’, the plans include two 16-storey residential blocks, intended for private rentals. Also within the plan are offices, a hotel, bars and restaurants, as well as an overhaul of the public spaces. Assuming approval, the developer wants to start the residential part of the project in spring 2018.

The College of Music itself is currently transforming its campus with a £57 million project, and the West Yorkshire Playhouse is going through a £14 million refurb.

Private Rentals

Dandara has engaged Interserve to deliver a £70 million project for 744 private rented apartments in Leeds. Consisting of four buildings on the southern side of the city centre, it achieved approval already in March 2015.

The apartments will be studio, one, two and three-bed, surrounded by landscaped ground and an underground purpose-built car park. Construction should complete in June 2019. Interserve is also responsible for constructing three schools in the city, with a combined value of £41 million.

South Bank Regeneration

Leeds City Council recommended a major redevelopment for approval. The regeneration of the old Tetley Brewery site on the South Bank includes 85,000 sq m of office space, 15,000 sq m of food, retail and leisure space, two hotels and 850 homes.

Led by Vastint, the UK arm of the developer has been working alongside the council for two years to get this far. They said that the scheme is a “significant regeneration opportunity” that will create “a large number of new homes, jobs and opportunities for investment”.

This number of high quality redevelopment schemes show exactly how much focus is on Leeds as a city with much to offer property investors, whether commercial, residential, or student housing.

Interested in investing. Check out our latest developments in Leeds.

Why Leeds Is the Best Place in England for New Developments

Clarence Dock, Leeds

New research from Argyll Property Partners shows that Leeds is the best option in England for planning new build developments. The research covers aspects such as value, house price growth, demand for property and the likelihood of planning success.

New build properties in Leeds are worth over 40% more than properties that already exist in the city. In addition, the value of new homes in Leeds are also up 13% year on year.

More Property Sales

 

Why Leeds Is the Best Place in England for New Developments Aspen Woolf

Image credit: Tim Green via Flickr

Leeds is one of the largest local authorities in England, and as such, there are around four times as many property sales in the city compared to the average for England. Another sign that it’s a property hotspot for investors is that the planning authorities approve 95% of all major residential applications.

Second in line for the best city in terms of local authority approval for new build developers is Birmingham, which is followed then by Cornwall, County Durham, Wiltshire, Bradford, Bristol, Manchester and Liverpool. The worst local authority for new build developers was found to be Surrey Heath.

Property Values Growing

In addition to the bonus of understand local authorities, new build developers can benefit from high growth in property values. New builds in Leeds are seeing growth in double digits due to the increasing proliferation of job vacancies. This is driving up the demand for more homes in the area.

There are decent gaps between the prices of new builds when compared to existing homes, which means that there are good profits to be made. The transaction figures are high as well, suggesting that homes should be easy to buy and sell.

Building Encouragement

Why Leeds Is the Best Place in England for New Developments Aspen Woolf

The City Council in Leeds is one of the best in the country for encouraging new builds and developments. Major new projects are springing up all over the city suggesting that many house builders are discovering the opportunities Leeds offers.

Looking at the opposite end of the research, the report showed that high property prices in Surrey mean that developers must pay extremely high prices to secure a site. Compared with other areas of the country, new builds in Surrey Heath are worth around 23% less than existing properties in the same area.

In addition, and directly opposite to findings from Leeds, homes in Surrey Heath are more difficult to buy and sell. Transactions are 50% lower than the average and the local council only approves 75% of planning applications for new build developments.

Investors Benefit Up North

Investors should weigh up options around the country, and focus on the north of England for the best deals at the moment. As well as the statistics shown in the report, Leeds is fast becoming one of the hotspots for a generation of young professionals.

The jobs are there, the regeneration of the city is there, and the space is there for new projects. Add in a sympathetic local council looking to actively increase the new house building developments, and you have a prime location for developers and investors.

If you’re looking to invest, then why not learn more about our latest investment opportunity in Leeds – Kirkstall Design Centre.