We’re dodging monstrous £22k stamp duty bill by building a shed office instead, says LEE BOYCE

My wife Danielle and I are currently living our own version of Love it or List it, the Channel Four television show fronted by property royalty Kirsty Allsopp and Phil Spencer.

On the ‘list our home for sale’ side is Danielle. With baby number two due soon, she feels we’ve outgrown our small but functional three-bedroom semi-detached home in Essex suburbia, bought as first-time buyers in 2016.

She’s gone well past the seven-year itch.

On the ‘love it’ side is me. The cost of upsizing makes me feel nauseous and as a result, I’ve become the ultimate Captain Financially Sensible, Computer Says No barrier to moving. I also like our cosy home.

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 the crosshairs for Danielle: a detached home with four bedrooms, an open plan kitchen, still close to the train station that gets us into London… and her holy grail – a utility room.

The snag? We’re looking at a price tag of at least £700,000.

We’ve built up a nice slab of equity in our current home, save diligently and have two decent salaries coming in.

But with a property price bar set that high, we’re talking about £22,500 on stamp duty for starters before we even start being tempted to spend a little bit more.

And then there’s the worry that we hand that money over only for the goalposts to move again, take the stamp duty holiday of 2020, for example.

Indeed, the goalposts moved not that long after we bought our first home – and paid stamp duty on it. These days, those taking their first step on the ladder don’t pay the tax up to £425,000.

Our monstrous prospective stamp duty bill helps turn what could be a step up the ladder into even more of a giant leap – and makes me feel like a trapped would-be second stepper.

On top of sky-high house prices and the stamp duty burden come higher mortgage rates (we locked into an ultra-low rate for five years in 2021 and even reduced the term by five years).

I keep pointing out that we’re overpaying the mortgage and making an excellent dent into what we owe the bank. I’ve never been keen to keep up with the Joneses and overstretch financially for the sake of it.

As a result of my sensible side of the debate, I’ve won the battle for now and a compromise has been reached. We’ve chosen to improve, not move.

Our new child will inherit bedroom three, the box room, which we both currently use as an office at various points during the week and weekend.

In the coming weeks, we will have a shed office built in the garden on an existing patio area at the back, which is currently dead space.

At 10ft x 9ft, it’s a great size and comes in at £11,000. Granted, we’re a little late to the party after the pandemic ‘shoffice’ boom.

The price includes full insulation, along with an electrician wiring it up with power, broadband and lighting. 

At half the cost of our potential stamp duty, I’d much rather see our outlay blossom into a tangible asset rather than as money for old rope in the form of a tax just for moving.

Also, it’s likely to add the £11,000 cost back as value on our home, with many buyers now seeing a separate office space – done right – as a valuable add-on.

Indeed, last year, research suggested that typically a home office adds £22,000 of value. That’s not why we’re doing it, but it feels like a potential extra win and neatly adds to the stamp duty argument.

I’m happy for our new baby to be ‘stealing’ the office. I’m not so keen on the Treasury nabbing a huge chunk of cash for nothing.

Homebuyers paid a total of £11.8billion in stamp duty last year, according to Coventry Building Society analysis of HMRC figures.

This was lower than the bill for 2022, thanks to a fall in property transactions and house prices after rising mortgage rates made buyers nervier.

Homebuyers in England and Northern Ireland currently pay stamp duty if a home costs most than £250,000, then it steps up on the amount above thresholds.

Between £250,001 to £925,000 its 5 per cent; 10 per cent from £925,001 to £1.5million; and 12 per cent on any surplus.

In March 2025, the starting point is currently set to drop to £125,000 taking the tax bill on an 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 – touching £30,000.

You can check your own prospective bill for moving with our stamp duty calculator.

Stamp duty gets tinkered with every few years. Are changes afoot in the budget on 6 March?

I wouldn’t be surprised to see more tinkering by the Chancellor to stimulate the property market after a limp 2023.

However, I don’t think another stamp duty holiday is the solution. The last one helped property prices rocket between summer 2020 and the end of 2021.

In my opinion, a calm measured approach to substantially reducing stamp duty permanently should be considered – with a guarantee the goalposts won’t be moved again for a long time to add more certainty.

Until then – and facing a £30,000 stamp duty bill if we move in 2026 when our mortgage deal expires – I think I’ll keep winning the ‘love it’ and stay put argument.

– A shorter version of this was in the Daily Mail on Wednesday 14 February. You can read it here: We can’t afford to downsize! They’re rattling around in large family homes – but retired couples face huge stamp duty bills