%VIRTUAL-SkimlinksPromo%More than a quarter of home buyers in England and Wales are now paying stamp duty at the higher rates of 3% or more and facing bills of over £7,500, according to research published today.
The data was released as pressure group the TaxPayers' Alliance launched a Stamp Out Stamp Duty campaign calling for a cut in the "punitive" levy, which raised £4 billion for the Treasury in 2012/13 - some £3.6 billion of which was collected at rates of 3% or more.
Sales of residential properties are free of stamp duty up to the value of £125,000 and attract a 1% tax between £125,000 and £250,000. But rising house prices mean that more and more purchasers are paying at the higher rates of 3% applied to homes worth between £250,000 and £500,000, 4% on those valued at up to £1 million, 5% on those between £1-£2 million and 7% beyond that point.
While home-buyers in London and the South East are hardest hit, an increasing number of people in other parts of the country are being hit by stamp duty at the 3% rate, which the TPA argues acts as a barrier both for an increasing number of first-time buyers and existing home-owners wanting to move house to get a new job, be near to relatives or accommodate a growing family.
Because stamp duty is imposed on the total value of the property, and not just the portion of the price which is above the threshold, families buying a home for between £250,000 and £500,000 pay between £7,500 and £15,000. Purchases between £500,000 and £1 million attract a levy of between £20,000 and £40,000.
Some 723,829 homes were bought in 2012/13, with more than 25% (182,692) being liable for stamp duty at a rate of 3% or more.
Stamp duty rates of 3% or more were imposed on 65% of all residential transactions in London, 39% in the rest of the South-East, 27% in the East of England, 24% in the South-West, 12% in the West Midlands, 10% in the East Midlands, 9% in the North-West, Yorkshire and the Humber, 8% in Wales and 6% in the North-East, according to the TPA research.
TPA chief executive Matthew Sinclair said: "Owning your own home is an important milestone, but for many families it seems harder and harder to reach.
"Ministers have done nothing to ease the burden imposed by stamp duty, which is an unfair double tax that gets in the way of would-be first-time buyers and others thinking about moving. Instead they have made things worse with new thresholds and new, higher rates. The Government needs to act on ministers' rhetoric about getting people onto the property ladder and cut this unfair tax."
The recent 2020 Tax Commission review by the TPA and the Institute of Directors concluded that stamp duty should be abolished, as did the Mirrlees Review from the Institute for Fiscal Studies.
A Treasury spokeswoman said: " This Government is determined to support aspiring homebuyers take their next step on the housing ladder. That's why, in this year's Budget, we introduced the Help to Buy programme to increase the supply of low-deposit mortgages to credit worthy buyers, increase the supply of new housing and contribute to economic growth.
"At a time when we are focused on reducing the deficit, cutting stamp duty land tax would create a significant cost to the Exchequer and this would have to be met through increasing other taxes. We believe there are other more effective ways to support the housing market, such as improving access to finance."
They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.
Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.
Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.
While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.
A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.
Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.
An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.
Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.