Warn clients of the cost of Stamp Duty

18 January 2010

We’re already well into a new year so has anything significant happened yet? Well, apart from the excitement of the third round of the FA Cup and the UK coming to a standstill at the slightest sign of snow we have also seen the return of the Stamp Duty threshold to £125,000.

September 2008 saw the government temporarily raise the lower threshold to £175,000 to stimulate the property market.

Has this been effective? There’s no doubt that while lenders have been charging some astonishing arrangement fees it has helped many first-time buyers who would have struggled to pay these fees, find large deposits and afford the Stamp Duty.

But is Stamp Duty really the stumbling block that some make out? In an economy where it is the only tax on residential property it could be argued that it’s not too inflated. And it’s argued by some that if an additional 1% is a struggle, perhaps buyers are not in the best state to commit to mortgages anyway.

The normal reason we hear for Stamp Duty being an issue for buyers is that they haven’t budgeted for it. So advisers should try to ensure it is budgeted for at the outset of potential purchases.

Not only should arrangement fees and repayment terms be considered but Stamp Duty and legal fees should also be outlined.

A close relationship with a solicitor should ensure that you are aware of all likely costs at the outset of deals.

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