What taxes are payable when buying a residential property?
The purchaser of the residential property in UK will need to pay Stamp Duty Land Tax when buying the house or a flat. The percentage payable depends on the property total purchase price and on other criteria such as freehold or leasehold properties. Below is the table which shows how much percentage of the tax the buyer will be obliged to pay when buying a freehold residential property. Apart from that, Stamp Duty Land Tax may be also due if a buyer leases the property for more than £125.000, so then 1% of tax is payable.
The government is controlling the prices and demand for properties in UK. The Stamp Duty Land Tax was increased to 7% for £2+ homes in 2013 so there was expected a slow price growth this year. In fact, there was observed only 7% annual price growth in September 2013, compared to 10% growth in the same month last year. Even though, stable economic situation in UK is one of the main reasons why investors find it safe and profitably to invest in London property. Another important aspect to mention is that the combination of low interest rates (which is only 0.5% and is regulated by Bank of England) and advantageous pound/dollar exchange rate have ensured the strong and stable market demand for homes in London.