‘Most buyers will be paying 3% Stamp Duty within two years’

The average home buyer will be saddled with a Stamp Duty bill of at least £7,500 within two years if house price inflation continues at its current pace, estate agency chain haart has predicted.

Haart is calling on the Government to raise Stamp Duty thresholds, with a warning that demand has fallen and ministers must be careful not to over-cool the market.

Using its own sales data, it says that house prices are currently growing at 10% a year, with exchanges up 9.2%.

If this pace continues, then the buyer of an average UK home will be paying Stamp Duty at 3% before the end of 2016.

This would mean buyers having to find at least an additional £5,000 when compared with the 1% band which applies to properties costing £250,001 and under.

According to haart’s sales data, the average price of a property sold subject to contract is £204,429 (in London, £490,595). These are respectively up 9.9% and 20.3% in a year.

New registrations at haart’s 200 branches slipped 7.5% on the month in June and dipped nearly 2% annually. The number of first-time buyers dropped 9.4% on the month and 2.8% annually.

Paul Smith, CEO of haart, said: “Stamp Duty bands have not moved upwards in line with house price inflation, a fact that successive governments have benefited from to the tune of £4.7 billion for 2012/2013.

“First-time buyers, who pay an average £154,645, have no relief as they are already in the 1% Stamp Duty band.

“The Government, and the Bank of England, need to be careful not to over-cool the market, and by raising the Stamp Duty tax threshold could help keep the market fluid.

“The new Mortgage Market Review measures are having an impact, but the new affordability tests and stricter scrutiny are applied at an early stage which means that only realistic buyers are considered and unrealistic ones are filtered out of the process quickly.

“This explains the fall in buyer registrations by 1.8% annually UK-wide (really a fall in unrealistic mortgage applicants being able to progress) with no accompanying dip in average property prices or in annual UK sales.

“These are the first signs of the market undergoing a natural, cathartic process of self-correction.”

Haart is not the only agent to report slipping applicant interest. Strutt & Parker says that nationally, applicant levels are down 10% on the year.

* The number of first-time buyers in the first six months of this year reached the highest level since 2007.

According to the Halifax, 144,500 first-timers stepped on to the housing ladder.

Their share of the home purchase market is now 46% – the highest proportion since 2000.

Almost two-thirds (60%) of first-time buyer purchases were above the £125,000 Stamp Duty threshold – with huge regional variations.

In London, 1% of first-time buyers escaped Stamp Duty and in the south east 10% did, and south west 23% bought at under the threshold. However, 72% of first-timers in the north bought below the £125,000 threshold.

Nationally, the average first-time buyer deposit was £31,129, again with large regional variations. In the north west, first-timers needed £16,532, but in London, they put down £76,435.

The average age of a first-time buyer is 30, according to the lender.


Email the story to a friend

One Comment

  1. alexwatts

    Sounds tough? compare with what the Scottish government is proposing for Stamp duty, imaginatively renamed as Land and Building Transaction Tax, (LBTT for short) of 7.5% over £180,000 and 10% for £1.5M plus… good for 1st time buyers here in Scotland ..but tough for the family/top end.


You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.