Today saw yet another blow for potential homeowners in Britain with news that the Government collected almost £1 billion more from home buyers in Stamp Duty in 2013-14 than it did in the previous year.
The total soared by 19 per cent from £4.7 billion to £5.6 billon, according to Lloyds Bank. The average homeowner is therefore set to pay £12,000 in stamp duty over their lifetimes, with this figure skyrocketing in London to £38,000.
The rise is due in part to a combination an overall increase in the number of properties sold as well as the ratchet effect of more homes being dragged into higher bands. The ‘slab rate’ design in particular has been criticised by the TaxPayers’ Alliance amongst others. This means that buyers pay the higher rate on the full value of a transaction, not just the value over a threshold. The Institute for Fiscal Studies has called it ‘a strong contender for the UK’s worst-designed tax’.
London Central Portfolio and Cass Business School estimate that 13,866 people a year are reducing the asking price of their house to get under a threshold.
Much of the help given to buyers under George Osborne’s Help to Buy scheme will simply be taken back through increased Stamp Duty receipts thanks to higher prices. To me, this sounds like yet another seat for administrators on the whimsical carousel of Whitehall bureaucracy, where money is handed out by one administrator only to be taken away again by another.
The long term solution is clear: abolish Stamp Duty entirely. But in the mean time, home buyers desperately need relief now and the Chancellor should follow one of the three options in our 2013 proposals: halve the rates, reform the structure or double the thresholds.
If you haven’t signed up yet, add your voice to the StampOutStampDuty campaign with our quick tool to send a message to your MP. Go to StampOutStampDuty.org