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First-time Buyer

Quarter of home-buyers pay stamp duty of £7,500 or more

Joanna Faith
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Joanna Faith

More than a quarter of home-buyers in England and Wales are now paying stamp duty at the higher rates of 3% or more, research has revealed.

While home-buyers in London and the South East are hardest hit, hundreds of thousands of people across the country are being hit with stamp duty bills of over £7,500, which acts as a barrier both for first-time buyers and families wanting to buy a new home, said The TaxPayers’ Alliance (TPA) study.

The group has launched a “Stamp Out Stamp Duty” campaign calling for a cut in the ‘punitive’ tax.

Sales of residential properties are free of stamp duty up to the value of £125,000 and attract a 1% tax between £125,000 and £250,000.

In 2012-13, over £4bn was paid by home-buyers in residential stamp duty, of which £3.6bn was paid at a rate of 3% or more, according to the study.

In England and Wales some 723,829 homes were bought in 2012-13, with more than a quarter (182,692) being liable for stamp duty at a rate of 3% or more.

The TPA said stamp duty prevents people from moving when they need to for a new job or to be closer to relatives.

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said: “Owning your own home is an important milestone, but for many families it seems harder and harder to reach.

“Ministers have done nothing to ease the burden imposed by stamp duty, which is an unfair double tax that gets in the way of would-be first-time buyers and others thinking about moving. Instead they have made things worse with new thresholds and new, higher rates. The Government needs to act on ministers’ rhetoric about getting people onto the property ladder and cut this unfair tax.”

In response to the campaign, Ben Thompson, managing director of Legal & General Mortgage Club, said: “Stamp duty remains a barrier to entry into the housing market for a number of want-to-be homeowners, however the levy is particularly harsh for those ‘second steppers’ wishing to move on to their next home.

“Overall we need to see reduced costs for those wishing to buy and move, in order to create a more mobile and healthier housing market. Alongside this we need to see increased housing construction, thereby addressing the current and increasingly important problem of housing supply, and keeping prices within reach of first timers, as well as helping with economic growth and job creation.”