Newspaper article The Evening Standard (London, England)

Would It Be Fairer to Make Sellers Pay the Stamp Duty? It's a Tough Tax for London's First-Time Buyers. Sara Yates Suggests Another Way to Pay It

Newspaper article The Evening Standard (London, England)

Would It Be Fairer to Make Sellers Pay the Stamp Duty? It's a Tough Tax for London's First-Time Buyers. Sara Yates Suggests Another Way to Pay It

Article excerpt

Byline: Sara Yates

THE capital's housing market offers Londoners a raw deal. First-time buyers have to stump up an average PS409,000, according to Halifax, Britain's biggest mortgage lender. That means that in addition to finding a minimum PS40,000 deposit and at least PS2,000 for legal and mortgage fees, they are also hit with a stamp duty bill for more than PS10,000. This additional hurdle stops many getting on the ladder.

The Government introduced a graduated stamp duty system in the 2014 Autumn Statement. Under this system you pay zero per cent on the first PS125,000 of the price of your property, then two per cent on the proportion up to PS250,000, five per cent on the proportion up to PS925,000, 10 per cent on the next slug up to PS1.5 million and 12 per cent on the rest.

Before the new bands came in, you paid a tax rate on the whole purchase price. According to the Treasury, the new system helps "98 per cent of those buying their first home, so that more people can achieve their dream of becoming homeowners".

Unfortunately for Londoners, stamp duty is based on national house prices, not the market in the capital. Latest government data shows that 64 per cent of residential housing purchases in England, Wales and Northern Ireland cost less than PS250,000. But the high cost of a London starter home means would-be buyers find their first property transaction pushes them into the third tax bracket.

This means that an average London flat, which costs PS467,000 according to Rightmove, comes with a PS13,800 stamp duty bill. The average terrace house, at PS602,000, generates an eyewatering PS20,100 tax bill. Given these large sums, it's no surprise that London and the South-East paid nearly half of the PS11 billion stamp duty collected by the Treasury last financial year. …

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