Five-fold rise in homebuyers paying stamp duty
Failure to increase the higher stamp duty thresholds in line with house price growth has led to a five-fold increase in the number of homebuyers who have to pay the tax, research has indicated.
The £250,000 and £500,000 thresholds at which stamp duty is charged at 3% and 4% respectively have not been increased since they were introduced in 1997, despite house prices soaring by 140% during the same period, Halifax said.
The group said if the thresholds had been increased in line with house price rises, the 3% rate would only apply to properties worth more than £600,000, while the 4% rate would not kick in until a home was bought for £1.2m.
The failure to raise the thresholds has led to a five-fold increase in the proportion of buyers who have to pay stamp duty at one of the higher rates.
Halifax estimates that 26% of homes were sold for more than £250,000 in 2010, well up on the 5% that changed hands for this price or more back in 2000.
There are an estimated five million properties in the UK that are now valued at £250,000 or more, far beyond the 875,000 that were worth this amount in 2000.
There has also been an 88% increase in the stamp duty bills that individual homebuyers face, with these jumping from £955 in 2000 to £1,793 last year.
But 95% of first-time buyers are currently exempt from paying the tax as a result of the temporary increase in the threshold at which stamp duty starts, with this rising from £125,000 to £250,000.
Stamp duty revenue rose by 12% to £3.3bn in the 2009/10 tax year, but it is still less than half the £6.7bn that was collected in its peak year of 2007/08.
The decline has been caused by a steep fall in the number of homes changing hands each year, with transactions currently running at around half their pre-credit crunch level, while the fall in house prices has also had an impact.
Only 1.1 million properties will be affected by next month's increase in the top rate of the tax from 4% to 5% for homes worth more than £1m, which is being introduced in part to help pay for the higher starting threshold for first-time buyers.
Martin Ellis, housing economist at Halifax, said: "There has been a substantial rise in the percentage of homebuyers paying stamp duty at the higher rates over the past decade.
"However, it is encouraging that a number of steps have been taken in recent years to aid those looking to get on the property ladder, including the temporary increase in the starting threshold from £125,000 to £250,000 for first-time buyers."