Halifax finds huge rise in stamp duty

01 February 2005
New homeowners are now paying nine times more in stamp duty land tax than they were ten years ago, according to the Halifax.

Figures released by the mortgage lender show that the government will collect an estimated £4 billion in stamp duty this financial year, which is much higher than the £465 million collected in 1993/94.

This is because the threshold at which stamp duty is payable has not been raised in line with rising property prices.

A new poll by the Halifax found that 81 per cent of people think the current stamp duty regime is unfair on first-time buyers, with 70 per cent stating that the threshold should be raised.

In 1993, buyers paid an average of around £45,000 for their first homes, which was well below the stamp duty threshold of £60,000.

But the Halifax claims that with the average price of a starter home now £131,000, first-time buyers in 98 per cent of the towns surveyed have to buy properties above the threshold level.

If the government increased the £60,000 threshold in line with house price inflation since 1993, it would stand at around £157,000 and thus prevent many first-time buyers having to pay stamp duty.

Halifax chief economist Martin Ellis argues: "Housing activity is an important part of the UK economy, and it is right that a government should take its fair share of tax revenue from it.

"Fairness is a two-way street, however, and unfortunately successive governments, irrespective of their political colouring, have failed to play fair by homeowners by declining to index link the stamp duty threshold to house price increases."

To read more about mortgages, click here.
© DeHavilland Information Services plc