STAMP DUTY BILL OF AT LEAST £7,500 FOR HOME BUYERS IN 79 TOWNS
07 October 2006
Source: HBOS
New Halifax research shows that the average house price in 79 towns* (16%) surveyed in England is above the £250,000 threshold at which a 3% rate of stamp duty is levied. The typical home buyer in these towns will be faced with a stamp duty bill of at least £7,500.
It has been over nine years since the higher stamp duty thresholds - £250,000 and £500,000 - were introduced. They have not been increased since then despite a 162% increase in the average house price over the period. In July 1997, when the £250,000 stamp duty threshold was introduced, there were no towns with an average house price above the £250,000 threshold. In 2001, there were 18 towns (4%) with an average house price above £250,000.
2.6 million properties valued above 3% stamp duty threshold
Halifax estimates that 2.6 million (17%) English properties are now valued above the £250,000 stamp duty threshold; and 400,000 (3%) are valued above the £500,000 threshold. London and the South East account for 67% of homes valued above £250,000 and 81% of homes valued above the £500,000 threshold.
175% rise in stamp duty revenue from higher stamp duty bands
The amount of stamp duty revenue raised from sales of properties valued at more than £250,000 has risen by 175% from £1.2bn in 2000/01 to £3.4bn in 2005/06. Revenue raised from properties in the higher stamp duty bands accounted for 74% of total residential stamp duty revenue (£4.6bn) in 2005/06, up from 58% of total residential stamp duty revenue (£2.1bn) in 2000/01. 80% of the rise in the total residential stamp duty tax take over the past five years has been due to an increase in the amount raised at the higher 3% and 4% rates.
31% of properties in London valued between £250,000 and £500,000
31% of residential properties in London are valued between the £250,000 and £500,000 thresholds, along with 20% of properties in the South East. The South West and East Anglia both have at least 10% of houses valued between £250,000 and £500,000, at 13% and 10% respectively. Additionally, 8% of properties in London and 4% of houses in the South East are valued above the £500,000 stamp duty threshold.
* 482 towns have been surveyed in this report, including the 32 London boroughs.
5.4 million properties projected above £250,000 threshold in 5 years
Halifax projects that the number of properties in England valued above the £250,000 stamp duty threshold will more than double to 5.4 million properties (35%) over the next five years. This forecast is based on the threshold being left unchanged and house prices rising at an average of 5% per annum, in line with real long term historical averages. More than two thirds of properties in London are projected to be valued above the threshold by then, along with almost half of all houses in the South East. On the same basis the number of properties in England valued above the £500,000 threshold could rise to 900,000 (6%) in five years.
Indexing implies £650,000 threshold for 3% stamp duty threshold
If the higher thresholds had been increased in line with house price inflation since July 1997, the £250,000 threshold would now stand at £650,000 whilst the £500,000 would be £1,300,000. Halifax calls on the government to increase the higher thresholds in line with the increase in house prices since 1997 and to commit to index link them to house price inflation in the future.
Key Findings
• The stamp duty payable on the average house sale has at least tripled in 62 towns over the past five years, reflecting a shift in the average stamp duty rate from 1% to 3% in the majority of these towns. Ilkley in West Yorkshire has seen the sharpest increase, up 566% from £1,345 to £8,961.
• Halifax calculates that property sales above the £250,000 stamp duty threshold accounted for at least 20% of housing transactions in 29% (142) of towns in England over the past year. This compares with 11% (55) of English towns five years ago and 1% (5) of towns in Eng
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