Halifax calls for stamp duty thresholds to be raised

Halifax, the UK’s biggest mortgage lender, is calling on all political parties to raise the stamp duty thresholds to account fully for the rise in house prices over the past decade and to commit to raise all the thresholds in line with house price inflation in the future.

Halifax has compared the average residential stamp duty bill in 405 Local Authorities (LAs) in Great Britain with average full-time gross earnings by LA over the five years from 2002 to 2007. Data has been sourced from the Halifax house price database, the ONS and HM Revenue and Customs.

Home buyers in 29% (118 out of 405) of local authorities (LAs) have a stamp duty bill equivalent to more than 20% of average annual gross earnings, compared to only 5% (19) of local authorities five years ago.

The average residential stamp duty bill in the UK is equivalent to 7% of annual full-time gross earnings compared to 5% in 2002. In the South East, the proportion has increased from 7% to 23%.

The average home buyer in the majority of LAs in London (91%) and the South East (61%) has a stamp duty bill that equates to more than 20% of local average annual earnings.

The number of properties in the higher stamp duty bands has increased dramatically in the past five years. The number of properties in the UK valued above £250,000 has increased by 201% from 1.8 million in 2002 to 5.5 million in 2007.

Homebuyers in Chichester have seen the biggest rise in stamp duty bills as a percentage of earnings over the past five years; from 7% in 2002 to 37% in 2007.

New research from Halifax highlights that the average home buyer in nearly one in three (29%) of local authorities (LAs) – 118 ouf of 405 – needs to set aside the equivalent of more than 20% of local average annual gross full-time earnings to pay the stamp duty bill associated with buying their new home. Five years ago, in 2002, the average stamp duty bill was equivalent to more than 20% of average annual full-time earnings in only one in 20 (5%) of LAs – 19 out of 405.

Across the UK, the average home buyer paid a stamp duty bill of £1,971 in 2007, equivalent to 7% of average annual full-time earnings. Five years ago in 2002, the average stamp duty bill of £1,211 was equivalent to 5% of earnings. By region, stamp duty was highest as a percentage of full-time earnings in 2007 in the South East (23%) and London (21%) and lowest in Scotland (5%). Five years ago, the average home buyer in all regions paid the equivalent of less than 10% of average annual full-time earnings for residential stamp duty.

The average stamp duty bill was worth more than 20% of average full-time earnings in 91% of London LAs (29 out of 32) and 61% of LAs in the South East (41 out of 67) in 2007. In 2002, only 25% of London LAs (eight) and 12% of LAs (eight) in the South East had an average stamp duty bill of more than 20% of full-time earnings.

The average stamp duty bill was equal to less than 5% of average full-time earnings in nine LAs (2%) in 2007, compared to 153 (38%) LAs in 2002. All these LAs are in the north.