News In Focus
Stamp duty "choking" housing market, homeowners claim
Rocketing stamp duty rates are choking the housing market, according to campaign group the Homeowners Alliance.
In a report, Stamping on Aspiration, the Alliance says the average stamp duty per house purchase has risen over elevenfold since the mid-1990s, from £532 in 1995-96 to £5,957 in 2011-12 – 4.6 times faster than the rise in house prices and 7.1 times faster than the inflation rate. The Government's take from the tax rose eightfold in a decade, from £830m in 1996-97 to £6.68bn 10 years later, as the number of stamp duty bands rose from one to five.
Sales over £125,000 attract stamp duty on the full price and the top rate is now 7% on properties sold for over £2m.
With the UK Government forecasting that it will make as much money taxing people buying their homes as from the taxes on alcohol and tobacco by 2017-18, the report says its policy is completely inconsistent with its proclaimed aim of helping homeowners and discouraging smoking and drinking.
The Scottish Government is currently promoting legislation for a Scottish land and buildings transaction tax to replace stamp duty in Scotland, but it is projected to bring in at least as much revenue as the current tax.
The Alliance wants the system overhauled to exempt first time buyers from the tax and to have thresholds raised each year in line with house price inflation. If that had been done in past years, it says, the £250,000 threshold would now be over £600,000 and the £500,000 mark over £1.2m. It also wants more of the burden shifted to people buying to let, and second home owners.
Paula Higgins, chief executive of the Homeowners Alliance, said: “The housing market is being choked by the rising cost of stamp duty. The overwhelming majority of people want to own their own home, and the Government says it wants to help them. But the reality is that its 'home tax' is taxing their aspirations to death.”
She added: “It is very unfair that ordinary people pay the same tax to buy the roof over their head as investors do when expanding their property empire, or when people buy holiday homes they use only a few weeks of the year. The Government must end the reduced rates and exemptions for buy-to-let landlords and second homeowners, and use it to slash the tax on first time and other ordinary homebuyers.”