Would reducing stamp duty, or stamping it out altogether, help you to buy your first home? Or is stamp duty just the price we have to pay to get a foot on the property ladder?
Anyone buying a property worth more than £125,000 has to pay Stamp Duty Land Tax. Rates start at 1% for the lowest value properties and increase in bandings through to 7% for properties worth more than £2m.
On top of saving up for a deposit and covering all the other costs, such as legal fees and surveys, stamp duty can be a burden buyers struggle to afford.
Stamp out Stamp Duty
The Taxpayer’s Alliance (TPA) has launched a ‘Stamp out Stamp Duty’ campaign. It thinks the second stamp duty banding of 3% for properties worth £250,001 – £500,000 is where buyers really start to struggle. Last year more than 25% of property purchases attracted stamp duty of 3% or more. On a property worth £250,001 that’s an extra £7,500 to stump up.
The government is already making efforts to boost the housing market through its Help to Buy scheme. It wants to get the housing market moving to keep the economy booming. However, given the reality of our personal finances, as our recent findings suggest, many are struggling to make ends meet let alone invest in a home they can call their own.
Stamp duty paid by sellers
The TPA are not the only group pushing for stamp duty reform. A few weeks ago a group of 40 Conservative MPs published a report suggesting that sellers, rather than buyers, should be liable for the tax. Although such a move would help first time buyers, it would do little to help existing property owners move house.
And the Scottish Parliament has just voted to scrap stamp duty and replace it with a new Land and Buildings Transactions tax. Although final details will not be finalised until next year it has been suggested that property purchases worth under £180,000 will attract no tax at all under the new regime. The tax would then be applied in stepped rates above that, to end the current situation where there are big increases in cost at different thresholds.
A friend of mine is house hunting at the moment and limiting her search to properties within the £250,000 bracket as 1% is the maximum she can afford to pay for stamp duty. Have you based your property choice on a stamp duty banding or were you able to take advantage of the stamp duty holiday? How do you think we can keep the housing market moving while keeping property affordable?