Thrifty Loans

It is possibly the tax that is the most disliked of all. At a time when interest rates are going up and the price of houses has almost gone off the scale for many people, if buyers do manage to find a house they like within their budget and they find a mortgage to suit, they are than hit by stamp duty.

A report published today suggests that first-time buyers are faced with stamp duty bill averaging around £1,500. When every penny counts, this huge amount on top of everything else can come as a major stumbling block to many buyers in most regions in Britain, says the report which come from Policy Exchange, the centre-right think-tank.

The rise is house prices over the last decade means that a lot more properties no attract stamp duty than did in 1997.

There is no duty charged on sales up to £125,000; stamp duty is 1% for homes sold for between £125,000 and £250,000; from £250,000 to £500,000 stamp duty is 3%; above £500,000 the rate is 4%.

For example, a home sold for £350,000 means an extra bonus paid to the Treasury of £10,500.

The thresholds for stamp duty have by no means kept pace with rising house prices. Most homebuyers used to be exempt from stamp duty when its level was such that most houses fell below the thresholds, but now it is seen as a tax on the masses, not just on the affluent few. When Mr Brown got the job as Chancellor stamp duty was 1% on all properties over £60,000. The UK’s biggest mortgage lender, Halifax, says that the stamp duty trap has caught an extra 2.6m homes in the last nine years. Nearly 20% of houses and flats in England are now worth over £250,000. Figures from last year from the Council of Mortgage Lenders show that 55% of first-time buyers and 86% of home movers using a mortgage had to pay the tax.

Now Prime Minister, Gordon Brown this week is expected to announce plans to help youngsters buy homes. But is was Mr Brown as Chancellor who made sure stamp duty trapped more and more people when buying a home, and helped prevent youngsters from doing so.

The think-tank says stamp duty should be slashed or abolished altogether.

Related posts:

1. Stamp Duty Cost £6.5bn In 2007
2. The South Pays Three Times As Much Stamp Duty As The North
3. Average London home now above £300,000
4. House prices down in August
5. Woolwich predicts sellers’ market