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Buyers £4,500 better off on average after stamp duty changes

Money

The average home buyer is £4,500 better-off as a result of the stamp duty changes introduced a year ago, according to Halifax.

Since the changes came into force on 4 December 2014, the typical home buyer has paid a total of £3,676 in stamp duty (based on the current average house price in England and Wales of £273,5311). Under the previous ‘slab’ structure, a buyer paying this price would have been subject to stamp duty payments of £8,205 – a saving of £4,529.

The ‘tipping point’ price is £938,000, above which point a buyer is worse off under the new stamp duty structure. Increased property prices and a higher number of residential property transactions boosted stamp duty revenues by 16 per cent between 2013-14 and 2014-15 to a new record high of £7.5bn. This comfortably exceeded the previous high of £6.68bn at the peak of the last housing market boom in 2007-08 and was more than 14 times as much as the £520m raised by residential stamp duty 20 years ago’ in 1994-95.

London alone contributed 40 per cent of all UK stamp duty revenues in 2014-15 compared with 13 per cent of all property transactions. London’s stamp duty share has risen from 28 per cent in 2007-08, with revenues raised in the capital increasing by 60 per cent from £1.9 billion in 2007-08 to £3 billion in 2014-15.

Four-fifths (80 per cent) of all home purchases in England and Wales between May 2015 and July 2015 were above the starting stamp duty threshold of £125,000 ranging from nearly all sales in London to 55-60 per cent in northern England and Wales. This compares to 71 per cent in 2006 when the starting threshold was initially raised to its current level. The starting threshold would now be £157,000 (£32,000 higher) if it were raised in line with house price inflation since 2006.

Nationally, nearly one-third (32 per cent) of all purchases by first-time buyers were below the £125,000 threshold at which stamp duty becomes payable during the three months from August 2015 to October 2015.

Halifax mortgages director Craig McKinlay says: “The changes made to stamp duty a year ago have been of significant benefit to many buyers. Only those purchasing the most expensive homes are worse off. There is some evidence that the top end of the market has been adversely affected by the changes with sales over £1.5m falling.

“The failure to index the start point for stamp duty in line with house price inflation has dragged more buyers into the tax net in recent years. Buyers in London have been particularly badly affected with the capital accounting for an increasing and disproportionately large share of stamp duty revenues.”

Chadney Bulgin mortgage partner Jonathan Clark says: “Aside from the obvious issue of a deposit, stamp duty is still the biggest cost associated with purchasing a house for most people and the majority of my clients are now considerably better off as a result of the stamp duty changes.  I’ve even noticed some people have been able to bring their house purchase plans forward a month or so as a result of this.”

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  • Trevor Steward 7th December 2015 at 11:12 am

    Halifax are missing a huge point regarding the stamp duty saving, if you take into account the fact it’s pushed house prices up any one buying over £250,000 is probably paying more overall where they’ve saved on stamp duty they’re paying more for the property.