Conveyancing Fees and Stamp Duty: Did You Know the Government Takes Over 90%?
- AuthorPaul Hajek
What proportion of the overall legal costs of purchasing a house or flat in the UK goes to your Conveyancing Solicitor?
Say you were buying at £350,000. OK that’s a bit above the average but by no means in the realms of the super rich.
The answer and at the risk of exploding an urban myth is approximately 5-6% of the total legal costs of buying a property goes on your Conveyancing solicitor’s fees.
I am afraid there are no prizes for guessing where the rest goes?
A whopping 90% to the government in Stamp Duty Land Tax and VAT, with a further 2 and a bit percent to another Government Department, the Land Registry.
It is incredible that out of a total cost of approximately £11765 that around £10600 goes on Stamp Duty Land Tax and VAT
The rest of the Conveyancing fees are made up of search fees, online money laundering checks and bank transfer fees.
What is Stamp Duty Land Tax ?
Its name was changed by the then Chancellor Gordon Brown a few years back. It was one of his tax changes that didn’t quite make his budget speech, but turned up in the small print later. It is in fact a new tax and different to the old Stamp Duty.
Originally, Stamp Duty was levied in the late 17th Century to build up the war chest for a war against France.
Personally, I would hazard a guess that we must have enough in the kitty by now to have a go. At the very least reclaim Calais.
How much is Stamp Duty?
The concession for Stamp Duty Land Tax to be exempt on properties below £175000 was withdrawn at the end of last year. It now kicks in at 1% over £125000 (£150000 in so called disadvantaged areas) and 3% above £250,000.
The situation with Stamp Duty Land Tax gets worse if you are buying over £500,000 where the tax is levied at 4% on the whole of the purchase amount with no graduation or tapering to soften the blow.
If you are curious you can access the Clutton Cox special online Conveyancing Costs Calculator here and find out for yourself.
So next time you are in conversation with someone who has just purchased a property and claimed that their legal fees were in the thousands of pounds, you have the opportunity to remind them where the money really went!