1% threshold goes up to £250k, above that it is 3% up to £500k(?) I think.
Effectively this means that spending over £250k will cost you over £5k in additional stamp duty (i.e. over £7.5k instead of £2.5k), but the fact that may scare off some buyers could mean that there is less competition for houses costing slightly over £250k. In other words if someone has a house on at say £280k (assume this is a realistic valuation) they probably get plenty of offers at £250k but not many at £255k.
Market forces should level out this sort of thing anyway but unlike income taxation it's kinda weird in that you have to pay the extra duty on the full value of the property, not just the proportion that is over the threshold. A sale at £255k only nets the vendor an extra £5k but costs the buyer £12.65k more. I do wonder sometimes how often dodgy deals get done whereby it goes on the books at £250k but there are further payments for fixtures and fittings etc.
