Housing market hit by huge stamp duty rises

Campaign group the Homeowners Alliance found the typical stamp duty paid when buying a home had rocketed more than tenfold since the mid-1990s.

The average stamp duty paid by home buyers had risen from £532 in 1995/96 to £5,957 by last year, the Stamping on Aspiration report found.

The report argued that the “ramping up” of stamp duty costs by successive governments had been a major factor behind a sharp drop-off in home ownership rates.

The Alliance said stamp duty had been “transformed from a small irritant to a major dampener on housing activity”, rising seven times faster than inflation over the last decade-and-a-half.

In 1997, the Government made just £830m from residential stamp duty, but by a decade later it was eight times higher at £6.68bn, the group said.

It is urging a radical overhaul of the system, including stamp duty thresholds being raised annually in line with house price increases and first-time buyers being permanently exempt from paying any stamp duty at all.

If stamp duty thresholds had risen in line with house price hikes in recent decades, the £250,000 threshold would now be over £600,000 and the £500,000 threshold would have been lifted to £1.2m, the group said.

The report found that the highest stamp duty was typically paid in London at £17,529, 
while the lowest was in the 
North East, at £1,466 on average.

Paula Higgins, chief executive of the Homeowners Alliance, said: “The housing market is being choked by the rising cost of stamp duty.”

Mr Higgins added: “The overwhelming majority
of people want to own their 
own home, and the Government says it wants to help them.

“But the reality is that its ‘home tax’ is taxing their aspirations to death.”

A recent study from the Office for National Statistics (ONS) showed that the proportion of people owning their own homes in England and Wales had fallen to 64 per cent by 2011, from a 69 per cent peak in 2001.

The Homeowners Alliance said the average stamp duty paid now equated to almost three months’ worth of average earnings, compared with just over one week’s worth of typical wages in the mid-1990s.