Buyers celebrate Budget bonus on stamp duty: The new threshold is a windfall for some, reports Andrew Bibby

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The Independent Online
ESTELLE NELAN, a Sheffield nurse and first-time home buyer, is one of many who have suddenly found themselves several hundred pounds better off as a result of the Budget changes in stamp duty.

Ms Nelan's offer of pounds 46,000 for a three-bedroomed terraced house has been accepted and she is hoping to move in next month. Under the new stamp duty rules, she can save the 1 per cent duty of pounds 460 she would previously have had to pay. 'I'm very pleased. I plan to put the money into decorating the house,' she said.

Kirsty Jennings, another first-time buyer who is about to purchase a pounds 50,000 home in Kenilworth, Warwickshire, with her fiance, said their pounds 500 windfall might be spent on a washing machine and fridge. 'We were going to have to get a loan to buy furniture and electrical appliances. Having some extra money is very useful indeed.'

Norman Lamont's decision to raise the stamp duty threshold on house purchase from pounds 30,000 to pounds 60,000 has also been welcomed by estate agents. The change officially takes place from next Tuesday, but all purchases between pounds 30,001 and pounds 60,000 made on or after Budget Day will escape the duty as the Inland Revenue is holding back processing the forms.

Stamp duty, one of the oldest forms of tax, is applied when house purchase documents are formally endorsed by the Revenue, within 30 days of a completion of sale.

However, while some home buyers may be celebrating their savings, would- be purchasers who have offered just over pounds 60,000 may be less happy. If an agreed offer price includes an element for furnishings such as carpets and curtains it may be possible to split this into a separate transaction, bringing the actual house price down to pounds 60,000.

However, estate agents this week showed reluctance to reopen arranged deals. 'I'm not sure it would be in the vendor's interests,' said David Johnson, managing director of the Leicester agents Spencers. He thought buyers might see this as an opportunity to try their luck with a lower bid.

'There's enough gazundering going on at the moment without encouraging this still further,' he said. Estate agents themselves stand to lose a small amount of commission if independent arrangements are made for furnishings.

There may also be practical problems if a house purchase is almost complete. Christine Toynbee, a solicitor with the Coventry firm Robert Zara, said she discussed the Budget changes this week with a client, who nevertheless decided to proceed at the original price of pounds 62,000.

'We've already got the mortgage cheque, so there would have been additional costs,' she said. The conveyancing procedure adopted by many solicitors involved a detailed inventory of the fixtures and fittings included in the sale, so any late amendments to this could delay the sale.

For future home buyers, however, the stamp duty threshold is bound to be a matter of importance, not least because above pounds 60,000 the 1 per cent duty is payable on the full price. Estate agents say arrangements to save stamp duty by selling furnishings separately were common when houses regularly sold for around pounds 30,000.

'I think you could have an agreement to pay an extra pounds 2,000 for furnishings on a house sale of pounds 59,950. As long as the figure is reasonable you'll get away with it,' one agent said this week.

Which fixtures can legally be separated is a grey area. Fitted kitchen units would normally be considered an integral part of a house. 'It would be interesting to have a ruling from the Revenue as to how far you can break down a house into its component parts,' said David Johnson, who uses the term 'non-fixtures and fittings' to describe items such as carpets and curtains to which separate arrangements could apply.

There is also a potential mortgage snag. Lenders must be informed if the actual house price is reduced, and borrowers getting the lender's maximum percentage advance will find the size of their loan is reduced accordingly. Saving pounds 600 stamp duty may mean that they have to fund the extra for furnishings from their own resources.

----------------------------------------------------------------- FIRST-TIME BUYING ----------------------------------------------------------------- Average price paid by first- time house buyers ----------------------------------------------------------------- pounds Saving pounds UK . . . . . . . . . . . . . . . . .44,000 440 North . . . . . . . . . . . . . . . 33,500 335 Yorkshire & Humberside . . . . . . .36,900 369 North West . . . . . . . . . . . . .39,900 399 East Midlands . . . . . . . . . . . 36,400 364 West Midlands . . . . . . . . . . . 42,700 427 East Anglia . . . . . . . . . . . . 42,700 427 South-west . . . . . . . . . . . . .43,400 434 South-east . . . . . . . . . . . . .51,500 515 Greater London . . . . . . . . . . .66,000* - Wales . . . . . . . . . . . . . . . 36,000 360 Scotland . . . . . . . . . . . . . .40,600 406 Northern Ireland . . . . . . . . . .30,000 - ----------------------------------------------------------------- *Including flats Source: Halifax BS -----------------------------------------------------------------

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