My wife Danielle and I are currently living our own version of Love it or include itthe Channel Four TV show fronted by property royalty Kirsty Allsopp and Phil Spencer.
On the ‘list our house for sale’ side is Danielle. With baby number two due soon, she feels we have outgrown our small but functional three-bedroom semi-detached house in suburban Essex, which we first bought in 2016.
The seven-year itch is over.
On the ‘I love it’ side I am. The cost of gaining size makes me nauseous, and as a result, I’ve become the ultimate Captain. Financially sensible, says the computer. There are no barriers to moving. I also like our cozy house.
Phil ‘n’ Kirstie: We would be ideal candidates for Love it or List it, the popular TV show fronted by Phil Spencer and Kirstie Allsopp.
In Danielle’s sights: a detached house with four bedrooms, an open kitchen, still close to the train station that takes us to London… and its holy grail: a laundry room.
The inconvenient? We are looking at a price of at least £700,000.
We have built up good equity in our current home, have saved diligently, and have two decent salaries.
But with such a high property price, we’re talking about £22,500 in stamp duty to start with, before we start to be tempted to spend a little more.
And then there is the worry that we will hand over that money only to have the goalposts moved again, such as the 2020 stamp duty holiday.
In fact, the goalposts were moved shortly after we bought our first house and paid stamp duty on it. Today, those who take the first step on the ladder do not pay the tax up to £425,000.
Our monstrous stamp duty bill helps turn what could be a step up the ladder into an even bigger leap, and makes me feel like a trapped second step wannabe.
On top of sky-high house prices and the burden of stamp duty come higher mortgage rates (we locked in an ultra-low rate for five years in 2021 and even reduced the term by five years).
I keep pointing out that we are overpaying the mortgage and making a huge dent in what we owe the bank. I’ve never felt like keeping up with the neighbors and stretching myself too hard financially just for the sake of it.
As a result of my sensible side of the debate, for now I have won the battle and a compromise has been reached. We have chosen to improve, not move.
Our new son will inherit the third bedroom, the storage room, which we both currently use as an office at various times during the week and weekend.
In the coming weeks we will be building a garden shed office on an existing patio to the rear, which is currently dead space.
At 10ft x 9ft it’s a great size and costs £11,000. Of course, we’re a little late to the party after the pandemic ‘soffice’ boom.
In fact, last year, research suggested that a home office typically adds £22,000 in value. That’s not why we’re doing it, but it feels like a potential extra gain and clearly adds to the stamp duty argument.
The price includes full insulation, plus wiring for electricity, broadband and lighting by an electrician.
At half the cost of our potential stamp duty, I’d rather see our outlay become a tangible asset rather than money for old ropes in the form of a tax just for moving.
Plus, it’s likely to add the £11,000 cost to our home’s value, and many buyers now see a separate, well-made office space as a valuable addition.
In fact, last year, research suggested that a home office typically adds £22,000 in value. That’s not why we’re doing it, but it feels like a potential extra gain and clearly adds to the stamp duty argument.
I’m happy our new baby is “stealing” the office. I’m not too keen on the Treasury taking a huge amount of cash for nothing.
Homebuyers paid a total of £11.8bn in stamp duty last year, according to Coventry Building Society’s analysis of HMRC figures.
This was below the bill for 2022, thanks to a drop in real estate transactions and home prices after rising mortgage rates made buyers more nervous.
Homebuyers in England and Northern Ireland currently pay stamp duty if a home costs more than £250,000 and then increases the amount above the thresholds.
Between £250,001 and £925,000 it is 5 per cent; 10 per cent, from £925,001 to £1.5 million; and 12 percent on any surplus.
In March 2025, the starting point will currently be reduced to £125,000, taking the tax bill for the average priced home in England from £3,018 to £5,518, according to Coventry.
That would add another £6,250 to my £700,000 example, approaching £30,000.
You can check your own potential moving bill with our stamp duty calculator.
Stamp duty is changed every few years. Are budget changes coming on March 6?
I wouldn’t be surprised to see more tinkering by the Chancellor to stimulate the housing market after a weak 2023.
However, I don’t think another stamp duty holiday is the solution. The latter helped real estate prices skyrocket between summer 2020 and the end of 2021.
In my opinion, a calm and measured approach should be considered to substantially reduce stamp duty permanently, with the guarantee that the goalposts will not be moved again for a long time to add more security.
Until then (and facing a £30,000 stamp duty bill if we move in 2026, when our mortgage deal expires), I think I’ll continue to win the “I love it” argument and stay put.
– A shorter version of this appeared in the Daily Mail on Wednesday 14 February. You can read it here: We can’t afford to downsize! They live in large family homes, but retired couples face huge stamp duty bills
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