North-south first-time-buyer stamp duty divide
An article by the Council of Mortgage Lenders today reveals huge regional differences in the payment of stamp duty by first-time buyers.
In northern England, four out of five of first-time buyers (82%) escape paying the tax on their first home, but in London this figure is just one in 33 (3%).
The news is not much better for first-time buyers hoping to get on to the property ladder in the south east of England, where only 18% avoid paying stamp duty. But in the north west and in Yorkshire and Humberside, more than two thirds (70%) of first-time buyers avoid being caught by the tax.
It is a similar story for the higher rates of stamp duty. In the north west and Yorkshire and Humberside, the proportion of first-time buyers who currently pay more than £250,000 for their first home - and are therefore liable for to pay duty at 3% - is less than 1%. But in London this figure is 25%.
CML director general Michael Coogan said: "It is shocking to see the huge regional differences in first-time buyers' liability for stamp duty. This raises important questions for policy makers in government. While there is a stated desire to help more people across the UK into the housing market, though schemes such as shared equity, the high entry costs of buying a home will undoubtedly make many potential first-time buyers in the south think twice.”
"London stands out as the place where the vast majority of first-time buyers pay significant levels of stamp duty. The amount of tax first-time buyers pay is bound to be a hot topic at the next election.”
“We believe that it is more urgent than ever for the government to reform the current stamp duty structure to remove the clear distortions and disincentive it creates in the housing market, and reduce the burden faced by many first-time buyers."
CML says that stamp duty is not only increasing the tax burden on home-buyers, it is distorting the housing market and are calling for reforms they say would address both issues.
Ending the practice of levying stamp duty at the highest marginal rate on the whole price of the property would remove market distortion. This could be achieved with no loss of revenue to the government, if necessary.
Home-owners could then be protected from a growing tax burden by indexing stamp duty in line with house price inflation.
An article by the Council of Mortgage Lenders today reveals huge regional differences in the payment of stamp duty by first-time buyers.
In northern England, four out of five of first-time buyers (82%) escape paying the tax on their first home, but in London this figure is just one in 33 (3%).
The news is not much better for first-time buyers hoping to get on to the property ladder in the south east of England, where only 18% avoid paying stamp duty. But in the north west and in Yorkshire and Humberside, more than two thirds (70%) of first-time buyers avoid being caught by the tax.
It is a similar story for the higher rates of stamp duty. In the north west and Yorkshire and Humberside, the proportion of first-time buyers who currently pay more than £250,000 for their first home - and are therefore liable for to pay duty at 3% - is less than 1%. But in London this figure is 25%.
CML director general Michael Coogan said: "It is shocking to see the huge regional differences in first-time buyers' liability for stamp duty. This raises important questions for policy makers in government. While there is a stated desire to help more people across the UK into the housing market, though schemes such as shared equity, the high entry costs of buying a home will undoubtedly make many potential first-time buyers in the south think twice.”
"London stands out as the place where the vast majority of first-time buyers pay significant levels of stamp duty. The amount of tax first-time buyers pay is bound to be a hot topic at the next election.”
“We believe that it is more urgent than ever for the government to reform the current stamp duty structure to remove the clear distortions and disincentive it creates in the housing market, and reduce the burden faced by many first-time buyers."
CML says that stamp duty is not only increasing the tax burden on home-buyers, it is distorting the housing market and are calling for reforms they say would address both issues.
Ending the practice of levying stamp duty at the highest marginal rate on the whole price of the property would remove market distortion. This could be achieved with no loss of revenue to the government, if necessary.
Home-owners could then be protected from a growing tax burden by indexing stamp duty in line with house price inflation.
posted by tony at 7:46 PM
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