74% of FTBs paid stamp duty in 2016
Recent research has indicated that in 2016, almost three quarters (74%) of first-time buyers paid stamp duty on their properties compared to 53% ten years ago.
Data from the Yorkshire Building Society indicated that the proportion of first-time buyers who had found a home under £125,000 – the stamp duty threshold – had halved in a period of just ten years.
In 2006, the stamp duty threshold was increased to keep in line with inflation of house prices. Since then, despite the average house price growing by 35% and more houses being eligible for the tax, the threshold has remained the same. In order to levy the tax against a similar proportion of first-time buyers who paid it in 2006, the threshold would need to be risen to around £175,000.
Adding to the struggle for those trying to access the property market, over the same period, there has been a 1% fall in real terms for average wages.
Believing the stamp duty should be made a tax for the seller, Yorkshire Building Society is calling on the government to reform stamp duty in the upcoming budget.
If stamp duty were to be paid by the seller, UK first-time buyers could save £3,625 on average, with those in London saving £13,171. For those who are moving up the property ladder, an average saving of £4,154 could be made across the UK, whilst £9762 could be saved in London.
Commenting on the findings was Andrew McPhillips. The Chief Economist at the Yorkshire Building Society highlighted the issues with stamp duty as it stands as well as the need for the government to increase the housing supply.
“In its present form, stamp duty does not suit today’s housing market – it pushes up costs for those looking to buy, exacerbating affordability issues in a market where prices have vastly outpaced wage growth.
“Levying the charge against sellers rather than buyers will help to reduce costs for first-time buyers, helping more people to get on the property ladder. It would also help those moving up the property ladder, enabling them to move to a more suitable property and potentially freeing up smaller homes for first-time buyers to purchase.
“Although this would help to alleviate some of the effects of the housing crisis, it does not address the root cause which is the lack of supply. The government should implement the proposals in their recent White Paper and go further to boost housebuilding so that there are enough properties available for people to buy.”
MP John Stevenson commented: “I have long been a supporter of changing who pays stamp duty on house sales. At present, it penalises first-time buyers and those aspiring to move up the housing ladder. I have and will continue to make representations to Government regarding such a change appearing in this year’s budget.”