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London investors split deals to minimise stamp duty - claim

The recent changes in stamp duty means some investors in high value locations like London are splitting their purchases to reduce their liability.

Buying agency Black Bricks says prior to the reforms announced late in 2014 by Chancellor George Osborne, someone with £2m to invest would have probably purchased a single property. 

“Now a £2m property would carry stamp duty of £153,750 while two £1m properties would be taxed at £43,750 each – encouraging our £2m investor to buy two £1m properties and ‘save’ £66,250 in stamp duty” says Black Brick managing partner Camilla Dell. 

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“Our data suggests investors are targeting the lower end. In January to July last year, our average deal value was £3.54m.  In the same period this year, that average has fallen to £1.5m” she says.

“The policy has also backfired on its own terms, reducing the tax-take to the Treasury. Research firm LonRes calculates that stamp duty paid for prime London sales is down 6.4 per cent since the reform was introduced compared with the same period last year” says Dell.

She says prime London’s property market needs a “major correction” of as much as 20 per cent to bring it back to live. And it could happen, she warns.

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    This stamp duty saving is untrue...............If two buyers together each buy half the property as part of a single exchange/completion the stamp duty is still based on half the £2 million overall transaction rate, not on £1 million each as the above example says.

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    This is wrong. An investor buying 2 properties whether £1m or 2m each would be subject to the surcharge on both properties (assuming that as an investor they already own propert if not the second one would be subject to the higher rate). For an existing property owner or investment company SDLT on £1M would be £73750 not £43750 and on £2M £213750 not £153,750.. granted there is a saving if buying 2 properties each at £1m but it is a lot more than covered in this article.

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