One in four first-time buyers is paying stamp duty, study says
The HomeOwners Alliance said there was a risk first-time buyers become ‘a taxation cash cow’
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Your support makes all the difference.Skyrocketing house prices has meant that one in four first-time buyers are now paying stamp duty, a new analysis has revealed.
The HomeOwners Alliance, which used HM Revenue and Customs (HMRC) data for its research, said around 26 per cent of first-time buyer transactions were liable for stamp duty in the first quarter of this year.
The organisation, a property advice website, has urged the government to undertake a review of the tax and said soaring houseprices are pushing homeowners into higher stamp duty brackets.
The latest figures compare to around one in five (20 per cent) first-time buyer transactions in the fourth quarter of 2017. Changes were made from November 2017 that first-time buyers paying £300,000 or less would not be liable for stamp duty.
First-time buyers paying between £300,000 and £500,000 pay stamp duty at 5 per cent on the amount of the purchase price in excess of £300,000, while those buying a property for more than £500,000 pay the tax at the normal rates.
The average house price hit another record in May of £289,099, and Bank of England base rate increases have also seen mortgage rates rise, pushing up borrowing costs.
Paula Higgins, chief executive of the HomeOwners Alliance, said: "It's clear that the stamp duty tax needs to be reviewed to ensure it's facilitating rather than fettering first-time buyers."
Ms Higgins added: "Alongside announcing new initiatives to increase homeownership, the Government needs to increase the existing first-time buyer relief threshold.
"The relief was introduced in 2017 to reduce the upfront costs for first-time buyers.
"Fast forward five years and there is a real risk first-time buyers become a taxation cash cow, which can't be right."
The Alliance said first-time buyer relief should be raised from £300,000 to £350,000 "as a minimum". It said stamp duty thresholds should also be raised annually in line with house prices.
The HomeOwners Alliance said it would like the government "to be bold" and scrap stamp duty entirely for people buying a home to live in.
Scotland and Wales have different property taxes which apply to housing transactions.
Additional reporting by PA
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