New Stamp Duty rules are a good deal for shared ownership homebuyers
- Credit: Archant
Shared ownership homebuyers will benefit from significant savings on the cost of their share of the property following last week’s Stamp Duty reforms.
Only the share bought will be liable for the tax and no Stamp Duty will be charged on the rented portion.
This means that the seemingly impossible feat of buying a property in the heart of Hampstead that falls below the £125,000 threshold could arise for some buyers.
A studio flat in the Isokon building is available at the moment, towards which buyers will have to contribute a minimum 40 pc share of £116,000, meaning that the purchase will be exempt from Stamp Duty. The full price of the flat is £290,000.
There is also a two-bedroom flat in West Hampstead, where a 45 pc share in the £775,000 property costs £348,750, with £7,437.50 Stamp Duty payable on the share.
The most striking comparison between the old ‘slab’ method and the new progressive charge is when the purchase price for a share works out at £126,000. Under the old rules, Stamp Duty would have been £1,260 but is now reduced to £20.
With shared ownership, homeowners can ‘staircase’, or buy more shares in their property over time. HMRC are still seeking clarification from the Treasury for how these changes will affect the costs of staircasing.