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3% stamp duty hits one in five buyers

Tuesday, 6 March 2007 12:00 AM

The three per cent rate of stamp duty is being paid by one in five homebuyers in England and Wales, new research from Halifax shows.

For properties valued between £125,000 and £250,000 stamp duty is one per cent on the entire house price, but between £250,000 and £500,000 this rises to three per cent. Above £500,000 a four per cent rate must be paid.

The bank's study also shows there has been a 281 per cent rise in the number of properties in England and Wales entering the three per cent stamp duty band in the last five years.

It also reveals there has been an 89 per cent rise in stamp duty revenue raised by property sales above £250,000, with the minimum amount paid £7,500.

"Halifax believes the current thresholds at which stamp duty is levied should be adjusted to reflect the significant rate of house price inflation seen over the past decade," the bank explained.

The study, which looked at over 2,000 postcode districts, finds London and the south-east have the highest number of homes valued above £250,000, representing 64 per cent of homes in the three per cent band and 77 per cent of homes in the four per cent band (£500,000 plus).

The postcodes worst hit by the three per cent band of the tax were BR4 in West Wickham, London, IG4 in Ilford, London and GL19 in Gloucester.

Buyers faced the biggest increase in their stamp duty bills in YO62, York, where the average bill went from £1,087 in 2001 to £7,620 in 2006, a rise of 601 per cent. Other big increases were WN8 near Pemberton in the north-west, and TR26 in St Ives in the south-west, up 585 and 583 per cent over the same period respectively.

Those looking to avoid stamp duty are best off in M38 in Manchester, HU3 in Hull and CF41 in Bridgend, Wales, where the proportion of sales below the one per cent stamp duty threshold is between 99 and 98 per cent.

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