Stamp duty snares more buyers after house prices rise

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ONE in five house buyers in Yorkshire will face a stamp duty bill of at least £7,500 by 2018 as prices rise, according to new forecasts.

The growth in the number of properties affected by the three per cent rate, which applies to houses costing between £250,000 and £500,000, is part of a wider pattern which is expected to see three in five sales in the region benefitting the Treasury.

The number of local authorities in Yorkshire and the Humber where at least half of property sales are at prices above the lowest stamp duty threshold of £125,000, is expected to rise from ten last year to 14 in 2018.

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said: “As the property market recovers, more and more people will be sucked into paying punitive rates of stamp duty and it will be more expensive to move than ever.

“High stamp duty rates stop young people buying a home and starting a family, discourage elderly people from downsizing and make it harder to move to a new place for a new job.

“The Government urgently need to cut stamp duty and ease the burden before the situation gets even worse.”

Harrogate and York are expected to see the highest share of homes hit by stamp duty, with 93 per cent paying at least the one per cent lowest rate.

Just 28 per cent of properties in Hull are expected to be affected even with the forcast improvement in the property market.

Stamp duty is imposed on the total value of the property rather than just the portion of the price which is above the threshold. This means families buying a home for between £250,000 and £500,000 pay between £7,500 and £15,000.

The findings come at a time when the housing market has been showing a strong pick-up in activity, following Government schemes such as Funding for Lending and Help to Buy, which make it easier to get a mortgage.

Lenders have been reporting a surge in first-time buyers flooding back into the market, which has helped to free up some housing chains. The strengthened demand, at a time when the volume of houses for sale on the market is still in relatively short supply, has led to a stronger-than-expected house price inflation.