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Stamp duty hits mortgage holders

Date: Mon, 25 Oct 04 Analysis

First-time buyers and those at the lower end of the housing market are being hit with large bills for stamp duty, according to new figures.

Gordon Brown has failed to increase the threshold for stamp duty since Labour came to power. But with house prices in some parts of the country up by 200 per cent over this period, stamp duty has become a tax paid by the overwhelming majority of house buyers.

Answers to a written Parliamentary question show that when Labour came to power 56 per cent of homebuyers paid no stamp duty at all, but in 2003 only 23 per cent of people were exempt from the tax.

Liberal Democrat shadow chief secretary, David Laws MP, said: "These figures show that first time buyers are facing a double squeeze - not only from higher house prices but by being swept into the stamp duty net.

"This is grossly unfair to those on low incomes and to first-time buyers who are struggling to get onto the first rung of the property ladder.

"In London and the south of Britain there can now be very few first time buyers and other low income buyers who are escaping this tax.

"It is clear that it is now time to radically reform this tax by significantly increasing, perhaps even doubling, the tax free threshold and by reforming the irrational rate structure. This should be a revenue neutral reform.

"Not only does stamp duty now apply too far down the property price ladder, but there are bizarre incentives to distort property price sales to avoid sudden leaps in the stamp duty bill at particular thresholds.

"The chancellor must tackle these problems in his pre-Budget report."

Barring some exceptions, stamp duty is paid on properties worth more than £60,000 at a rate of one per cent. This trebles on houses costing more than £250,000 and for properties worth more than £500,000 purchasers pay four per cent. Without exception all properties worth more than £150,000 pay stamp duty.

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