Thrifty Loans

In the last ten years homebuyers have had to pay £31.5bn in stamp duty, new figures have revealed.

In 2007 alone, the stamp duty figure was £6.5bn. It equates to a 675% increase since Labour came to power, as in 1997-8 a mere £830m was paid in stamp duty.

Part of the increase is down to changes made by Gordon Brown when he was Chancellor, and they were criticised at the time. Before Labour came to government stamp duty was 1% on all properties sold for £60,000 or greater. Now there are several bands: 1% on houses between £125,000 and £250,000; 3% on houses between £250,000 and £500,000 and 4% on properties above £500,000.

A house bought for £250,001 would mean stamp duty payment of £7,500. London’s prices average £402,000, on which stamp duty would be over £12,000.

The stamp duty tax bands have not kept pace with the inflationary rise of house prices.

Accountants Grant Thornton yesterday called the tax ‘inequitable’, and said Labour had not assisted first time buyers by raising the bottom threshold, as, with the average house price at nearly £200,000, the low-threshold rise had not helped many buyers.

The tax, said Karen Campbell at Grant Thornton, was stopping many would-be home buyers from getting on the property ladder. In 1997 400,000 people paid the tax; last year 1.1m did.

Most first-time buyers now have to pay the tax and, for many, it makes the difference between buying and not. In October last year, the Conservatives said they would get rid of stamp duty on all homes less than £250,000.

It has been calculated that if stamp duty has risen in line with house prices, then the zero rate threshold would stretch as high as £190,000.

There have been calls for a ‘stamp duty holiday’ to keep the property market alive. In 1992 then Prime Minister John Major introduced a stamp duty moratorium to get the property market restarted after its crash, and properties up to £250,000 were exempt from stamp duty for eight months.