Average Stamp Duty Bill Rises To Almost £2000
Recent research into stamp duty revenue now shows that the average home buyer faces a stamp duty bill of almost £2,000. This figure has increased by more than 60% over the last five years.
According to a report published by the Halifax, one of the UK's largest mortgage lenders, last year saw the average stamp duty bill reach £1,971 up from £1,211 in 2002. As a result this means that those wanting to buy a property in almost 33% of UK local authorities now have to save more than 20% of local average earnings in order to afford the bill.
In contrast, stamp duty bills in Scotland are still averaging at 5% of annual local pay.
The Halifax claims that those buying a home in London and the South East of England are faced with the highest stamp duty bill. This is due to the fact that property prices in these areas are considerably higher when compared to the rest of the UK.
During Labour's first 10 years of being in power, it has been rumoured that the Government has received some £31bn in stamp duty.
Financial adviser group Grant Thornton claims that stamp duty revenue on residential properties has increased from £830m in 1997/98 to £6.5bn in 2006/07. It has stated that when Labour first came into power there was but a single stamp duty rate of 1% on all properties with a value of £60,000 or more.
However in July 1997, the Government introduced a new 1.5% band for properties whose value exceeded £250,000 and a 2% rate for properties worth £500,000 plus. Stamp Duty Land Tax is an additional fee paid when you purchase a property such as a house, flat or other buildings and land.
Today's current tax is set at 1% if the property's value is worth between £125,000 and £250,000, 3% on homes worth between £250,001 and £500,000 and 4% for properties worth over £500,001. If the price of the property is below the value of £125,000 at point of sale, then no stamp duty is paid.
Karen Campbell, partner at the Grant Thornton finance group said:
"Stamp duty land tax is the best weapon the Government has at its disposal in helping people onto the property ladder, but the Treasury has continued to neglect the aspirations of the middle classes and drag more revenue out of struggling first home-buyers."
In addition the Halifax has said, "If the thresholds had been increased in line with house price inflation since July 1997, when the two higher bands were brought in, the tax would not be charged until a home was worth £191,000."
As it is, many first-time buyers are already struggling to get on the property ladder with the recent decision made last week by several lenders to put an end to their 100% plus home loan deals. Without a deposit, not only do they now have fewer options available, but they will also be forced to pay a much higher premium for the added risk that the lender is taking on.
For further information about Stamp Duty and Land Tax go to www.direct.gov.uk
Published on February 28, 2008
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