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Will increased house prices mean more buyers paying stamp duty?

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According to the TaxPayer’s Alliance, if house prices continue to rise at their current rate, stamp duty could be a real problem by 2018.

It’s estimated that around two fifths of those looking to buy property will face stamp duty costs of up to a minimum of £7,500. If four out of five properties were sold again by 2018, they would face these high stamp duty fees. Around 40% of homes will need to pay a stamp duty of at least 3%.

Current figures

The Taxpayer’s Alliance came up with these statistics after the quarterly figures were released by the Land Registry. They included newly built homes and homes that have been owned for a long time by the same people.

The average home is said to be worth £242,415. At the moment this is only around £8,000 under the 3% stamp duty. If homeowners living in these properties are already struggling financially, the situation is likely to only get worse for them over the next few years.

London and East Midlands to suffer

It’s been shown that 99% of London homes will have to pay stamp duty within five years. This is a high figure compared to the North West where around 60% of properties will need to pay the 3% stamp duty.stamp duty

Those in the East Midlands are also going to suffer as these homes will see the fastest rises in stamp duty charges. It’s estimated that 70% of homes will be liable for stamp duty compared to today’s 50%.

Wales is one of the main places that will remain largely unaffected by the changes – just one ion six homes will have to pay the increased stamp duty charges.

How stamp duty is calculated

There are differing stamp duty amounts based upon the value of the home. If your home is worth more than £125,000 you’ll have to pay 1% stamp duty. If it’s worth more than £250,000 the stamp duty will be 3%.

Properties worth over £500,000 face 4% charges, while houses worth over £1 million are hit with 5% stamp duty. If you’re lucky enough to own a £2 million home, the stamp duty increases further to 7%.

A third of homes are set to be moved to a higher stamp duty bracket by 2018. It’s the high stamp duty prices that discourage younger first time buyers. They simply cannot afford to pay these high costs. It’s also bad news for the elderly and for those who are looking at starting a family.

Decline in new homeowners

Pressure group, Taxpayer’s Alliance, has tried to cut this current levy via a recent campaign. The Treasury gained £4 billion in 2012 from stamp duty charges. If these estimations are correct, many people will no longer be able to afford to buy a home in five years’ time. This won’t just affect buyers; it will also have a massive impact on estate agents and those looking to sell their homes. There’s already been a steep decline in the amount of homeowners so these new figures are causing a lot more worry.

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About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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