The scale of stamp duty in the UK must reconsider

United Kingdom – a country exceptionally comfortable of taxation from the point of view of investments in real estate. The reputation of a safe haven for your investment provides real estate of London a constant flow of investment money. But there are serious concerns that it may cease to be such. If the current rate of growth in property prices will continue until 2016, and now they are growing about 10% per year , the amount of stamp duty ( state fee) to pay the average buyer of real estate in the UK will reach 3% . This circumstance can significantly slow down the real estate market.

Now the size of the state fee – 1% of the purchase amount £125000, and 3% from the purchase sum of £250,000 pounds. That is, if the purchase amount exceeds the threshold of £250000, the size of the state fee shall be tripled and will be instead of £2500 £7500.

According to the data submitted on the June report, property prices in the UK rose by 1.9% in the month and over the year they grew by 9.9%, reaching the average value by country £204429.

In London the growth rates somewhat shocking – real estate prices were growing sometimes by 5.8% in the month and 20.3% per year, reaching incredible size £490595 pounds for an average property .

However, last month property prices in the UK even decreased slightly, by 0.7% while they are 9.2% higher than in June 2013 . In the summer months of 2014 has decreased and the number of viewings of real estate objects.

It is obvious that due to the very rapid pace of price growth, it is necessary to revise the scale of stamp duty that was taken some years ago and does not reflect the realities of the market. Thus, the threshold at which the purchased property is subject to rate of stamp duty 1% – £125,000 pounds, and was developed taking into account the average cost of property for first-time buyers afford homes.

Today the average cost of housing for these buyers has reached £154645, which is much higher than the threshold and the buyers have to pay stamp duty at the rate of 1%.

The government and the Bank of England need to be very careful not to overcool your pet, the real estate market in the lower price range. The first signs of recovery of the market was demonstrated in June. Introduced stress tests have helped to eliminate from the market applicants who are unable to prove their solvency, and this was reflected in the market in the form of a small drop in prices. This is a natural process of self-purification market, which reflects its actual financial condition.

® Maxim Savitsky 22. 07. 2014

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