Stamp duty, is it choking the UK housing market?

Enable Independent, Independent Financial Advisors in Bishop’s Stortford were not surprised to see that stamp duty could be having a negative impact on the housing market according to a new report by HomeOwners Alliance.

Stamp duty, which has risen more than seven times the rate of inflation since the mid 90’s, now averages at £6,000 per purchase in the UK. The new ‘Help to Buy’ scheme due to be introduced in 2014, is going to be undermined if the government don’t look at tackling high stamp duty tax.

Based on figures from 1995-1996 the average stamp duty bill would have taken a buyer eight days worth of earnings to pay off, it would now take the average home owner 11 weeks to pay off the large bill. 

Stamp duty thresholds bands which were introduced by the coalition are split into three bands, with homes less than £125,000 having a 1% charge, homes between £125,000 and £250,000 are taxed at 3% and homes more than £500,000 are up to 7% above that figure. These bands need to be increased as the their has been 140% rise in house prices since the figures were initially set.

Despite the slow down in the housing market in certain areas in the UK since 2007, the government still earns an average £7bn a year of tax from the housing market, which is more than they earn from the tobacco industry. 

The HOA wants to see thresholds increased, and first-time buyers to be exempt from paying stamp duty. Paula Higgins, chief executive of the HomeOwners Alliance, stated: "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."

If you are looking at buying a home and need some independent advice, then why not give Enable Independent call, as we can give you independent advice from the best way to save for stamp duty to accessing some of the best mortgage rates available in the market place. 


Issued by: Enable Independent Financial Life Planners
 25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
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