UK househunters overwhelmingly call for reform of stamp duty.
Londoners in greatest need of respite, but mooted changes won’t help
Across the UK, only 0.2% of the properties currently advertised for sale on the propertyfinder.com site are under £60,000 and only 7.4% are under £100,000. The principle of the tax is clearly not questioned by homebuyers as only 8% want to see it abolished, but its application has become so burdensome that only 21% of respondents want it left unreformed.
The key findings are as follows:
- 67% want to see the threshold raised to £100,000 specifically to help first time buyers and keyworkers, even though they conceded that stamp duty might have to rise on their own properties. With the average house price over £183,000 it demonstrates that the majority of all categories of househunter are prepared to pay more in stamp duty to assist those at the bottom of the ladder.
- Perhaps unsurprisingly, first time buyers were the most likely to want to see the threshold raised to £100,000 however, it was remarkably consistent across the board that close to two thirds of all groups wanted to see the threshold raised to £100,000, even though they understood it meant that a higher burden of stamp would instead be placed on houses above that value.
- Nevertheless, first time buyers were also the most ignorant about the tax. First time buyers were twice as likely as other categories of househunter not to know what stamp duty was or how it would affect them (16% v 8%).
When asked how the tax should be reformed:
- 60% of all respondents wanted to see marginal bands introduced so the whole property does not automatically move into a higher bracket as its value increases.
- First time buyers were the least likely group to want to see marginal bands apply (only 54%) and the most likely to want to see no change to the current regime.
- Buy to Let investors were the most likely to want to see marginal bands apply (71%) and the least likely to want to see no change to the current regime.
Yet even raising the threshold to £100,000 will not make much difference. The average house price in the UK is £183,000 (Land Registry data) and only 7.4% of the properties currently advertised for sale on the propertyfinder.com website are on the market for under £100,000. An increase of the threshold to £100,000 although slightly fairer would not make a huge difference as the choice of properties would remain very limited. According to propertyfinder.com’s latest survey, 29% of the househunters on the site are first time buyers, yet only 7% of the properties for sale are less than £100,000.
Londoners are hardest hit by stamp duty
Londoners pay on average over 4.3x as much stamp duty as the average for the UK overall as the average London house price attracts 3% stamp duty compared to just 1% for the UK average. Simply raising the threshold to £100,000 would be no help to Londoners where the average house price is around £262,000. Indeed, only 0.6% of the properties in Greater London currently advertised on the propertyfinder.com portal are priced at £100,000 or below, a tiny proportion. Marginal bands would help alleviate the burden on Londoners who already have to pay the highest housing costs in the UK.
Jim Buckle, managing director of propertyfinder.com commented: ‘Stamp duty has become an increasingly indiscriminate tax hitting all categories of home buyer. Our survey shows househunters understand abolition is unrealistic, but there is clearly strong support for change to help those seeking to gain a foothold on the property ladder and for the fairer application of the tax across the price range of property.
The government has benefited from the extra stamp duty that rising house prices has generated. Yet with so few properties valued at under £100,000, even the mooted rise in the threshold to £100,000 will make the change outdated before it has been introduced. Marginal bands would be more appropriate if this tax is to be applied more fairly.’