Is stamping out stamp duty really the answer?

A huge problem is the the increases in stamp duty are not graduated. Once you go over the threshold you pay the new higher rate on the entire purchase price.

Pay £499,000 and stamp duty is 3% on the entire purchase price
Pay £501,000 and stamp duty is 4% on the entire purchase price 🙁

Should be 3 % plus 4% on everything in excess of £500,000 in the same way that income tax works.

The government has even abolished the Disadvantaged Areas Relief from Stamp Duty Land Tax – there was a higher threshold [£150K] before the tax. It doesn’t sound like much of a relief but since such areas typically have lower value housing it did assist people to get a little further up the housing ladder without being caught for stamp duty.

Where we live in Norfolk house prices are quite low compared with other parts of the south-east. This is the description of a typical property on the market at £250,000 : “Situated on a select small development of modern homes, with river frontage . . . a four bedroom detached house in a town centre cul-de-sac position with double garage; . . . gas heating system via radiators, double-glazed windows and rear garden with patio seating areas overlooking the river.” For £125,000 you can get: “A three bedroom ex-local authority mid-terrace house with two receptions, double-glazed windows and gas heating system via radiators. Accommodation comprises; entrance hall, kitchen, lounge, dining room, rear lobby, cloakroom, shower room, outside utility, landing, three bedrooms and family bathroom . . . gardens to the front and rear”. All the flats and a third of all the houses on the market are below the stamp duty threshold, so in this part of the country the stamp duty levels and bands are not a problem affecting many first-time buyers – indeed they can acquire some very desirable property. There are some very good-quality three-bed detached new-builds – eligible for the Help to Buy scheme – currently available at under £200,000 [£10,000 deposit]. As people trade up to these they release lower value homes to supply different sectors of the market; many of the smaller houses get bought up by landlords, however, which meets a need but has an impact on owner-occupation and flexibilty in the market.

Susan Crowe is spot on. Stamp Duty should be graduated. There is absolutely nothing to stop it being graduated by 0.1% or even 0.01% for every small incremental price change. The “cliff” at 250,000 causes massive market distortions and particularly in rural areas and the North where £250,000 remains a substantial amount of money . It absolutely should not be abolished. Whilst interest rates remain low, it is the only mechanism to prevent house prices sky rocketing so if anything, rates should be increased right now in attempt to stabilise or slightly depress house prices .
The Help to Buy scheme going up to SIX HUNDRED thousand is an obscene waste of public money and just makes matters worse

Stamp Duty is a disproportionate tax on the South East of England. There are plenty of areas around London where you’d struggle to buy anywhere for less than £250k. I’ve just paid £9k duty which is a big chunk of money that dwarves the other fees associated with moving and eats into your deposit. The ratio of average house price to household income in the SE is about 4.7 compared to 3.6 in the NE of England. Maybe regional rates are too complicated a solution, but I think a more graduated scale or income tax like approach would help. Wouldn’t stop me moaning about having to pay it though.

Why do house owners when moving house have to pay a heavy tax, when those in rented property do not? Perhaps the Chancellor should introduce a general moving tax. How’s that for a vote winner!