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How does the stamp duty compare now with before and with the new changes

 

The basic research indicates very clearly that we had 18 amazing months (between Dec 2014 and now) with effectively lowered Stamp Duty for purchases up to approximately £925,000 and those savvy investors that have taken maximum advantage by absorbing carefully selected and highly discounted property from Earnest Knight have made the real gains.

Basically The Chancellor has now reversed the significant drop in Stamp Duty that was implemented for the past 18 months and has brought it back to the levels of pre December 2014 with a bit of an increase on top to compensate for the previous period.

In a nutshell it shows one golden rule. The simple message to investors is: DO NOT PROCRASTINATE !!!

These last 18 months are perfect proof of that and those investors that have delayed their purchases in this period are now not making as much as those that have NOT procrastinated and that have reacted and acquired discounted property deals from us

 

Rough basics:

 

How it was until December 2014
Property Purchase Price  Stamp Duty
Up to £125,000  0%
£125,000 up to £250,000   1%
£250,000 up to £500,000 3%
£500,000 up to £1million 4%
£1million up to £2million 5%
Over £2million 7%

 

How it is from December 2014
Property Purchase Price    Stamp Duty
Up to £125,000 0%
The next £125,000 (£125,000 up to £250,000) 2%
The next £675,000 (£250,001 up to £925,000)  5%
The next £575,000 (£925,001 up to £1.5million) 10%
The remaining amount (the portion above £1.5mil) 12%

 

What is proposed from April 2016
Property Purchase Price  Stamp Duty BTL/second home
Up to £125,000    0% 3%
The next £125,000 (£125,000 up to £250,000) 2% 5%
The next £675,000 (£250,001 up to £925,000)  5% 8%
The next £575,000 (£925,001 up to £1.5million)   10% 13%
The remaining amount (the portion above £1.5mil) 12% 15%

 

The table below gives a brief comparison to the new changes comparing them to the long term average Stamp Duty in the UK up to December 2014 and giving an indication of the likely or needed rent increase to absorb the Stamp Duty differential.

Least impact/change is shown in the £250,000 property purchase bracket.

National average rental yield is 6.8% (but this is excluding London where the average yield is under 4% now and that would bring the national average down as well if it was included…..)

 

How it was upto

December 2014

From

December 2014

From

April 2016

What amount is weekly rent to increase to cover the stamp duty difference

(within the first year alone)

Current National average rent for the property in this bracket

Percent increase of the proposed rent rise to the average

£50,000 property purchase price

 

 

£0

£0

£1500

£29per week for a year

or

£14.5per week over 2 years

£3,400pa (£65.38pw)

44.12% increase over year

22.06% increase if spread over 2 years

£75,000 property purchase price

 

 

£0

£0

£2250

£43per week for a year

or

£21.5per week over 2 years

£5,100pa (£98.08pw)

44.12% increase over year

22.06% increase if spread over 2 years

£100,000 property purchase price

 

 

£0

£0

£3000

£58per week for a year

or

£29per week over 2 years

£6,800pa (£130.77pw)

44.12% increase over year

22.06% increase if spread over 2 years

£125,001 property purchase price

 

 

£1250

£0

£3750

£48per week for a year

or

£24per week over 2 years

£8,500pa (£163.46pw)

29.41% increase over year

14.71% increase if spread over 2 years

£150,000 property purchase price

 

 

£1,500

£500

£5000

£67per week for a year

or

£33.5per week over 2 years

£10,200pa (£196.15pw)

34.31% increase over year

17.16% increase if spread over 2 years

£175,000 property purchase price

 

 

£1750

£1000

£6250

£86.5per week for a year

or

£43.2per week over 2 years

£11,900pa (£228.85pw)

37.82% increase over year

18.91% increase if spread over 2 years

£200,000 property purchase price

 

 

£2,000

£1,500

£7,500

£105per week for a year

or

£53per week over 2 years

£13,600pa (£261.54pw)

40.44% increase over year

20.22% increase if spread over 2 years

£225,000 property purchase price

 

 

£2250

£2000

£8750

£125per week for a year

or

£62.5per week over 2 years

£15,300pa (£294.23pw)

42.48% increase over year

21.24% increase if spread over 2 years

£250,001 property purchase price

 

 

£7500

£2500

£10000

£48per week for a year

or

£24per week over 2 years

£17,000pa (£326.92pw)

14.71% increase over a year

7.35% increase if spread over 2 years

£275,000 property purchase price

 

 

£8250

£3750

£12000

£72per week for a year

or

£36per week over 2 years

£18,700pa (£359.62pw)

20% increase over year

10% increase if spread over 2 years

£300,000 property purchase price

 

 

£9000

£5000

£14000

£96per week for a year

or

£48per week over 2 years

£20,400pa (£392.31pw)

24.51% increase over year

12.25% increase if spread over 2 years

£325,000 property purchase price

 

 

£9750

£6250

£16000

£120per week for a year

or

£60per week over 2 years

£22,100pa (£425pw) | 28.28% increase over year | 14.14% increase if spread over 2 years

£350,000 property purchase price

 

 

£10500

£7500

£18000

£144per week for a year

or

£72per week over 2 years

£23,800pa (£457.69pw) | 31.51% increase over year | 15.76% increase if spread over 2 years

£400,000 property purchase price

 

 

£12000

£10000

£22000

£192per week for a year

or

£96per week over 2 years

£27,200pa (£523.08pw)

36.76% increase over year

18.38% increase if spread over 2 years

£450,000 property purchase price

 

 

£13500

£12500

£26000

£240per week for a year

or

£120per week over 2 years

£30,600pa (£588.46pw) | 40.85% increase over year | 20.42% increase if spread over 2 years

£500,001 property purchase price

 

 

£20,000

£15,000

£30000

£192per week for a year

or

£96per week over 2 years

£34,000pa (£653.85pw)

29.41% increase over year

14.71% increase if spread over 2 years

£1,000,001 property purchase price

 

 

£50000

£43750

£73750

£456per week for a year

or

£228per week over 2 years

or £192per week over 3 years

£68,000pa (£1307.69pw)

34.93% increase over year

17.46% increase if spread over 2 years

14.7% increase if spread over 3 years

 

The simple message to investors is: DO NOT PROCRASTINATE !!!

 

These last 18 months are perfect proof of that and those that have delayed their purchases in this period are now not making as much as those that have NOT procrastinated and that HAVE reacted and acquired discounted property deals from Earnest Knight

Leverage our time and research to your own advantage and continue on your road to building up more assets and more potential residual income

 

CALL Earnest Knight NOW 0208 6109 472 or email enquiries@earnestknight.com

 

An informed investor is a successful investor!

For the current research results and the best choice of property investments, as selected by property buyers, in the UK market do not hesitate to contact your Earnest Knight Consultant today

Information is free and can only be of benefit to you

CALL:                        0208 6109 472

FREEPHONE:             0800 3689 317

EMAIL:                       enquiries@earnestknight.com

 

 

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