The Treasury has taken in nearly £31.5 billion in stamp duty since Labour took office, according to the latest research.
A report from financial adviser Grant Thornton has found that during the ten years that the current Government has been in power, the revenue raised by stamp duty
on residential property has seen a dramatic increase from £830 million in 1997/98 to £6.5 billion in 2006/07. This is an average increase of 26 per cent over the ten year period, compared with a six per cent annual rise in the total amount of tax taken by the Government during the same time frame.
During the ten years of Labour Government, stamp duty rates have altered from the single rate of one per cent on all properties worth more than £60,000 in 1997. Shortly after the election, a 1.5 per cent band was created for homes worth more than £250,000, while those worth more than £500,000 paid the tax at two per cent, which subsequently shot up to three per cent for properties worth more than £250,000 and four per cent for ones worth more than £500,000 today.
Karen Campbell, Head of Stamp Taxes at Grant Thornton, comments: "In light of high property prices and tighter lending conditions, first-time buyers are struggling to afford their first property, and stamp duty land tax, in no small way, is impeding millions of potential home-owners from jumping on the property ladder.
"Stamp duty land tax is the best weapon the Government has at its disposal in helping people onto the property ladder, but the Treasury has continued to neglect the aspirations of the middle classes and drag more revenue out of struggling first home-buyers."
The research is being backed by the National Association of Estate Agents (NAEA) which is calling for a revision to stamp duty in order to help struggling first time buyers get on to the property ladder.
“The Government needs to be aware that with inflation rising consumers need a helping hand," said Stewart Lilly, President of the NAEA. "We would like to see a scale of stamp duty that reflects the house price inflation in recent years. We would also like to see a revision of Capital Gains Tax
for buy-to-let investors who are fast becoming the back-bone of the private rental sector.”
The NAEA has put forward its proposals for a revamped stamp duty scale based on a series of thresholds similar to income tax. For example, for a property worth £250,000, the first £200,000 would be under the stamp duty limit, meaning stamp duty would only be levied on £50,000 at one per cent.
Its suggested thresholds include buyers being exempt from stamp duty if the property is worth up to £200,000 and incremental increases of one per cent per £150,000 thereafter up to the two million pounds and above mark which would be charged at 4.5 per cent.
While the Government made changes to the stamp duty rate in 2006, raising it to £125,000, the increase in house prices has meant that many people have not benefited. However, the Conservatives have pledged that if they win the next election, they will abolish stamp duty for first-time buyers purchasing homes costing less than £250,000, in an attempt to make getting a mortgage
more affordable for those trying to make their first step onto the property ladder.
© Fair Investment Company Ltd