House Price Rises Mean More Buyers Will Pay Stamp Duty
The TaxPayers' Alliance claimed 99% of homes in London will be liable for stamp duty in five years' time and in the North West this figure will be three in five. It predicts that here in the East Midlands we will see the fastest increase in the number of homes liable for stamp duty, from around half to just over seven in ten by 2018. Its findings are based on property price growth forecasts over the next five years by Savills Research.
The TaxPayers' Alliance recently launched a Stamp out Stamp Duty campaign calling for a cut in the levy, which raised £4bn for the Treasury in 2012/13. Sales of homes are free of stamp duty up to the value of £125,000 and attract a 1% tax above this level and up to £250,000. But rising house prices as the housing market gathers pace mean that more purchasers face paying at the higher rates of 3% applied to homes worth over £250,000 to £500,000, 4% on those valued at over £500,000 up to £1m, 5% on those over £1m to £2m and 7% beyond that point. Three in 10 homes will have moved up into another stamp duty bracket in five year's time, the report predicted.
The findings come at a time when the housing market has been showing a strong pick-up in activity, following Government schemes such as Funding for Lending and Help to Buy, which have made it easier to get access to a mortgage.
Lenders have been reporting a surge in first-time buyers flooding back into the market, which has helped to free up some housing chains. The strengthened demand, at a time when the volume of houses for sale on the market is still in relatively short supply, has led to a stronger-than-expected rise in house prices this year so far.
Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "As the property market recovers, more and more people will be sucked into paying punitive rates of stamp duty and it will be more expensive to move than ever. "High stamp duty rates stop young people buying a home and starting a family, discourage elderly people from downsizing and make it harder to move to a new place for a new job. The Government urgently needs to cut stamp duty and ease the burden before the situation gets even worse."