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June 7, 2017

Save on stamp duty by building your dream home

Filed under: Blog — Instinctif Partners @ 11:08 am

Crispin Harris, Director of Jackson-Stops & Staff’s Wilmslow branch, discusses how some buyers are saving on stamp duty

Burdensome stamp duty land tax (SDLT) costs are coming between many buyers and their dream home. Last year our research found that the number of housing transactions fell by 14% annually, partly due to the Government’s decision to introduce an additional 3% SDLT on second home purchases. However, some savvy buyers, particularly those buying at above £1.5million, are considering ways of fulfilling their dream but also saving money in the process.

St Andrew’s House is available for a Guide Price of £2,250,000. A further 50 acres of land are available with a guide price of £15,000 per acre (equating to £2,645,000 for all land). For further information, call Jackson-Stops & Staff’s Wilmslow branch on 01625 540340.

One of the trends we have witnessed is cash rich would-be-buyers building their dream home rather than purchasing it, reducing the amount of SDLT payable significantly. As buyers only pay stamp duty on the cost of the land, and not the eventual built product, building a made-to-measure home is fast becoming a popular way of reducing the property purchase tax bill.

Not only are they able to save hundreds of thousands of pounds, they also have control over the design and specification of the property. With a significant budget, every detail can be tailored and fine-tuned and the highest quality materials used.

A piece of land we are currently marketing in Cheshire comes with planning permission in place for a beautiful country home that would be worth in the region of £10 million once built. In this instance the buyer would stand to save more than an estimated £1.1 million in stamp duty if it is their second home, whilst also benefiting from their very own 9-hole golf course.

We’ve noticed a substantial increase in the amount of interest among buyers for this type of venture and unless the future Government reviews stamp duty restrictions at this level it could have serious implications for the housing market. Lack of fluidity at the top end could stifle the market on several levels. The Government has repeatedly neglected to address this issue so we urge the next Government, once the general election airs clear, to take urgent remedial steps.