Halifax Urges UK Government To Increase Higher Stamp Duty Thresholds

by Philip Morton, Investors Offshore.com

10 October 2006

New research released at the weekend by UK building society, Halifax has revealed that the average house price in 79 towns surveyed in England is above the GBP250,000 threshold at which a 3% rate of stamp duty is levied. The typical home buyer in these towns will be faced with a stamp duty bill of at least GBP7,500.

According to Halifax:

"It has been over nine years since the higher stamp duty thresholds - GBP250,000 and GBP500,000 - were introduced. They have not been increased since then despite a 162% increase in the average house price over the period. In July 1997, when the GBP250,000 stamp duty threshold was introduced, there were no towns with an average house price above the GBP250,000 threshold. In 2001, there were 18 towns...with an average house price above GBP250,000."

Halifax estimated that 2.6 million of English properties are now valued above the GBP250,000 stamp duty threshold; and 400,000 are valued above the GBP500,000 threshold. London and the South East account for 67% of homes valued above GBP250,000 and 81% of homes valued above the GBP500,000 threshold.

It went on to announce that the amount of stamp duty revenue raised from sales of properties valued at more than GBP250,000 has risen by 175% from GBP1.2bn in 2000/01 to GBP3.4bn in 2005/06.

Revenue raised from properties in the higher stamp duty bands accounted for 74% of total residential stamp duty revenue (GBP4.6bn) in 2005/06, up from 58% of total residential stamp duty revenue (GBP2.1bn) in 2000/01. 80% of the rise in the total residential stamp duty tax take over the past five years has been due to an increase in the amount raised at the higher 3% and 4% rates.

Commenting on the findings, Martin Ellis, Chief Economist at the Halifax, announced that:

"The average home buyer in one in six towns in England is now facing a stamp duty bill of more than GBP7,500. The higher stamp duty thresholds haven't been adjusted since their introduction in 1997, despite a rise in house prices of more than 160%."

"We call on the government to increase the higher stamp duty thresholds in line with the increase in house prices since 1997. We believe the government should commit to index link all the stamp duty thresholds to house price inflation in the future."

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