The number of residential property sales attracting at least 3 per cent stamp duty, levied above £250,000, has increased from 73,403 in 2001 to 279,408 in 2006.
Home buyers in these transactions were faced with a stamp duty bill of at least £7,500. In 2006, 19% of home buyers paid at least 3% stamp duty compared with 6% in 2001.
89% of the rise in stamp duty revenue over past five years driven by sales above £250,000
Total stamp duty revenue from residential property sales was £4.6 billion in 2005/06, up 114% from the £2.1 billion raised in 2000/01. 89% of the rise in the residential stamp duty take over the five years was due to an increase in the amount raised at the higher stamp duty bands (3% on sales between £250,000 and £500,000 and 4% above £500,000). Stamp duty revenue raised from sales of properties valued at more than £250,000 rose by 175% from £1.2 billion in 2000/01 to £3.4 billion in 2005/06. The higher stamp duty bands accounted for 74% of total residential stamp duty revenue in 2005/06 compared with 58% in 2000/01.
3.5 million properties valued above 3% stamp duty threshold
Halifax estimates that 3.5 million (19%) English and Welsh properties are now valued above the £250,000 stamp duty threshold; and 600,000 (3%) are valued above the £500,000 threshold. London and the South East account for 64% of homes valued above £250,000 and 77% of homes valued above the £500,000 threshold.
Four-fold rise in number of postcodes above the 3% stamp duty threshold
There has been a more than four-fold increase in the number of postcodes where the average house price is above the 3% stamp duty threshold. The average house price in 485 postcode districts (23%) in England and Wales is now above the £250,000 threshold, compared to 111 districts (5%) in 2001.
Biggest rise in home sales above 3% threshold in postcodes in West Wickham and Ilford
There are 206 postcode districts in England and Wales which have seen at least a 30 percentage point increase in the proportion of home sales above the 3% stamp threshold over the past five years. The largest increase has been in BR4 in West Wickham in London, up 60 percentage points from 19% of sales in 2001 to 79% in 2006. The next biggest increases were in IG4 in Ilford in London with a 59 percentage point increase and GL19 in Gloucester with a 55 percentage point rise.
Almost one in three postcode districts have more than one quarter of sales above the 3% stamp duty threshold
Sales above the 3% stamp duty threshold accounted for at least 25% of property sales in 667 (31%) postcode districts across England and Wales in 2006, compared with 181 (8%) districts in 2001. These include 71% of London postcode districts and 54% of postcode districts in the South East. All regions of England and Wales have at least 5% of postcode districts with more than 25% of home sales above the 3% stamp duty threshold.
SW7 and SW1W hardest hit by higher rates of stamp duty
SW7 in Kensington (98%) and SW1W in Sloane Square (97%) in London are the two postcode districts with the highest percentage of sales above the 3% stamp duty threshold. B94 in Solihull is the postcode district with the highest proportion of housing sales above the 3% threshold outside the south of England (78%), followed by NE20 near Newcastle upon Tyne (70%).
Average stamp duty bill at least triples in 374 postcode districts over past five years
The stamp duty payable on the average house sale has at least tripled in 18% (374) of postcode districts over the past five years, reflecting a shift in the average stamp duty rate from 1% to 3% in these districts. YO62 in York has seen the biggest increase with the average bill up 601% from £1,087 in 2001 to £7,620 in 2006. WN8 (585%) near Pemberton in the North West and TR26 (583%) in St Ives in the South West have seen the next biggest rises.
No stamp duty paid in 30% of home sales in England and Wales
30% of home sales (450,999) in England and Wales attracted no stamp duty in 2006, up marginally from 28% of home sales (331,798) in 2001. This rise in the proportion of sales paying no stamp duty reflects the rise in the initial 1% stamp duty threshold from £60,000 in March 2001 to £125,000 in March 2006.
Higher stamp duty bands unchanged since 1997 despite 175% increase in house prices
The higher stamp duty thresholds - £250,000 and £500,000 – have been unchanged since their introduction in 1997 despite a 175% increase in the average house price over the period. The 1% stamp duty threshold was increased from £60,000 to £120,000 in March 2005 and then rose by a further £5,000 in March 2006. However, even these increases have not kept up with the pace of house price inflation. House prices have increased by 205% since March 1993 (when the 1% threshold was raised to £60,000) compared with a 108% rise in the stamp duty threshold.
Stamp duty thresholds should be indexed for house price inflation
If the higher stamp duty thresholds had been increased in line with house price inflation since July 1997 (when the £250,000 and £500,000 stamp duty thresholds were introduced), the £250,000 threshold would now stand at £680,000 and the £500,000 would be £1,360,000. If the lowest stamp duty threshold, 1% had been increased in line with house price inflation since March 1993, it would now stand at £185,000, compared to its current level of £125,000.
Tim Crawford, group economist, at Halifax, said: "Stamp duty revenue raised from home sales continues to rise rapidly. 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 been 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.
"Halifax calls on the government to increase the stamp duty thresholds in line with the increase in house prices since the mid 90s and to commit to index linking all the stamp duty thresholds to house price inflation in the future."
