The substantial reform of stamp duty announced in December's Autumn Statement will mean savings for around 750,000 home buyers across England and Wales, according to research from Savills.
All buyers up to £937,500 will benefit. By contrast, around 17,000 transactions above a value of £937,500 will bear an increased stamp duty tax burden, undermining the case for any further taxation of high value property.
All sales below £125,000 (approximately 32% of all transactions in 2014) will remain exempt from stamp duty, while the average duty paid on the sale of a property worth between £125,001 and £250,000 will fall by £650. The average amount payable for a property between £250,001 and £500,000 will fall by around £3,100.
A property worth £255,000, which would have previously been subject to a 3% rate on the entire value, will now incur stamp duty of £2,750, a saving of £4,900.
However, the average property (based on the average value of 2014 sales in this range) worth between £1m and £2m will see an increase of £13,500 in stamp duty, to an average of £83,500, with the additional liability for a property worth £1.5m equating to £18,750, taking the total to £93,750.
Overall, based on 2014 transaction levels, we estimate that the new tax structure will raise revenues of around £6.7billion from sales in England and Wales. According to our calculations, to offset the reduction in revenues from the mainstream housing market, properties over £1 million will generate additional sums totalling around £750million, the bulk (£590 million) of which will come from homes worth over £2million.
Savills UK Head of Residential Research Lucian Cook spoke to the BBC about the new stamp duty reform and what it means for home buyers and the property market in general.