Higher house prices boost stamp duty take
Almost a fifth of homebuyers have to pay stamp duty at a higher-than-standard rate due to rising property prices, according to a report from mortgage lender Halifax.
As people continue to make property their main UK investment, the proportion of homebuyers paying 3% stamp duty had gone up from 6% in 2001 to 19% in 2006.
Stamp duty is levied at 3% when a property is purchased for between £250,000 and £500,000. London and the South East accounts for nearly two-thirds of the homes attracting stamp duty at this rate.
The Government raked in around £4.6bn in stamp duty in 2005/06 – an increase of 114% on the 2000/01 figures, which shows how the UK investment in property has soared.
Tim Crawford, group economist at Halifax, said: “Bracket creep has been a key factor as a growing percentage of property sales now occur above the higher stamp duty thresholds of £250,000 and £500,000, which have not changed since their introduction in 1997.
“Nearly a quarter of postcode districts in England and Wales now have an average price above the 3% stamp duty threshold of £250,000, compared to only one in 20 districts five years ago.”
Crawford called on the chancellor to increase the level of stamp duty in line with the rise in house prices in the Budget on 21st March in order to ease the pressure as people make their UK investment in property.