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First-time buyers in south of England hit by stamp duty

First-time buyers in south of England hit by stamp duty

Monday, 10 March 2008 12:00 AM

Stamp duty thresholds are forcing up to 99 per cent of first-time buyers to pay the tax, according to new research from the Halifax bank.

Following analysis of information from the 342 local authorities in Great Britain between 2002 and 2007, found virtually all first-time buyers in the south were forced to pay, compared to just 42 per cent in the north.

Across the country as a whole first-time buyers in some 69 per cent of local authorities, or 237 out of 342, paid stamp duty in 2007.

In response, Halifax is calling on the government to increase duty thresholds to fully account for the rise in house prices over the past decade.

Furthermore, the country's biggest mortgage lender is also seeking a commitment to raise all the thresholds in line with house price inflation in the future.

"Stamp duty has again become an issue for first-time buyers because the stamp duty thresholds have not kept pace with house price inflation," said Martin Ellis, chief economist at Halifax.

"First-time buyers in the south are most likely to pay but so too are a growing percentage in the north. In London the average first time buyer is now liable to pay a stamp duty bill of more than £8,000."

The minimum stamp duty, of one per cent, is payable on properties valued over £125,000, rising to three per cent for homes selling for more than £250,000 and four per cent over £500,000.

The Halifax research also finds average first-time buyers in 19 per cent of local authorities in the south paid stamp duty at the higher rates of three and four per cent in 2007.

Across the UK, the average first-time buyer paid a stamp duty bill of £1,751 in 2007, equivalent to six per cent of average annual gross full-time earnings.

This was up from just £960, or four per cent of earnings, in 2002.

"The government has raised the one per cent threshold in recent years; unfortunately, more needs to be done," continued Mr Ellis.

"We call on all political parties to raise the stamp duty thresholds to compensate for house price inflation over the past decade and to commit to index the thresholds for house price inflation in the future."