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Call made to stamp out stamp duty
More than a quarter of home buyers in England and Wales are now paying stamp duty at the higher rates of 3% or more and facing bills of over £7,500, according to new research.
The data was released as pressure group the TaxPayers' Alliance (TPA) launched a Stamp Out Stamp Duty campaign calling for a cut in the "punitive" levy, which raised £4 billion for the Treasury in 2012/13 - some £3.6 billion of which was collected at rates of 3% or more.
Sales of residential properties are free of stamp duty up to the value of £125,000 and attract a 1% tax between £125,000 and £250,000. But rising house prices mean that more and more purchasers are paying at the higher rates of 3% applied to homes worth between £250,000 and £500,000, 4% on those valued at up to £1 million, 5% on those between £1-£2 million and 7% beyond that point.
While home-buyers in London and the South East are hardest hit, an increasing number of people in other parts of the country are being hit by stamp duty at the 3% rate, which the TPA argues acts as a barrier both for an increasing number of first-time buyers and existing home-owners wanting to move house to get a new job, be near to relatives or accommodate a growing family.
Because stamp duty is imposed on the total value of the property, and not just the portion of the price which is above the threshold, families buying a home for between £250,000 and £500,000 pay between £7,500 and £15,000. Purchases between £500,000 and £1 million attract a levy of between £20,000 and £40,000.
Some 723,829 homes were bought in 2012/13, with more than 25% (182,692) being liable for stamp duty at a rate of 3% or more.
Stamp duty rates of 3% or more were imposed on 65% of all residential transactions in London, 39% in the rest of the South-East, 27% in the East of England, 24% in the South-West, 12% in the West Midlands, 10% in the East Midlands, 9% in the North-West, Yorkshire and the Humber, 8% in Wales and 6% in the North-East, according to the TPA research.
TPA chief executive Matthew Sinclair said: "Owning your own home is an important milestone, but for many families it seems harder and harder to reach.
"Ministers have done nothing to ease the burden imposed by stamp duty, which is an unfair double tax that gets in the way of would-be first-time buyers and others thinking about moving. Instead they have made things worse with new thresholds and new, higher rates. The Government needs to act on ministers' rhetoric about getting people onto the property ladder and cut this unfair tax."
A Treasury spokeswoman said: "This Government is determined to support aspiring homebuyers take their next step on the housing ladder. That's why, in this year's Budget, we introduced the Help to Buy programme to increase the supply of low-deposit mortgages to credit worthy buyers, increase the supply of new housing and contribute to economic growth. At a time when we are focused on reducing the deficit, cutting stamp duty land tax would create a significant cost to the Exchequer and this would have to be met through increasing other taxes. We believe there are other more effective ways to support the housing market, such as improving access to finance."