How has stamp duty evolved over the past 25 years?

The cost of Stamp Duty Land Tax to the average homebuyers has increased by 490% over the last 25 years. 

The analysis has been conducted by London lettings and estate agent, Benham and Reeves, and also reveals that as a result of the significant increase in house prices the average bill post 30th September 2020 will be £3,548.

In the last 25 years, the cost of stamp duty has never been higher, despite the effective rate being paid falling below one percent when the structure was reviewed and a tiered system was introduced in December 2014.

When removing both unique instances of the recent SDLT holiday and the reprieve granted in 2009 in the wake of the financial crisis, the average cost of stamp duty has increased by an average of 8.4% every year since 1997.

In fact, other than the two occasions where stamp duty was paused and reduced, the tax bill paid by homebuyers has only seen a year on year decline on four other occasions.

The first three of these came prior to, and following, the initial stamp duty break in 2009 as house prices continued to decline following the financial crisis.

The other materialised in 2015 following the switch to the tiered structure whereby a property paid a percentage of stamp duty at each value threshold, rather than a full percentage based on the single threshold at which is sat.

The cost of £3,548 now faced by the average homebuyer is also a whopping 490% more than the £601 paid back in 1997

Commenting on the analysis, director of Benham and Reeves, Marc von Grundherr, suggests that SLDT receipts are too lucrative an income for the government to simply abolish, despite calls for reform.

“With the latest generation of homebuyers enjoying a taste of stamp duty free property purchases there are renewed calls for its complete abolition but, as always, these will continue to go unheard.”

“Over the last 25 years, the government has become very good at fuelling buyer demand while failing to address the housing crisis and building more homes. This has worked very nicely for them where an increased cost in stamp duty is concerned and their free slice of the pie, cut from the savings of struggling homebuyers, has continued to climb with absolutely no justification whatsoever.”

 

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