Beware of stamp duty increases!
As of 6 April 2011 the SDLT (stamp duty land tax) rate for properties being purchased for over £1m will be raised from 4% to 5%. This will add a minimum of £10,000 to the SDLT costs of buying a £1m plus property.
If this cost in not anticipated it could lead to a nasty surprise following exchange contracts. A conveyancing solicitor will require they are put in funds by the date of Completion of a purchase for all costs including the full SDLT. Where a property is being bought with a mortgage, this will be a condition of the mortgage offer. If the increase of SDLT has not been budgeted for, a buyer could find their solicitor is unable to complete on the Completion day due to lack of funds. This would lead to a breach of contract and could have serious consequences for the buyer.
It is important to note the increased rate will apply to all purchases that complete on or after 6th April even if they were exchanged before. A buyer must be aware it is a mistake to believe that exchange of contracts before the 6th April will exempt the buyer from the higher rate.