Homebuyers spend £12k on stamp duty
Homebuyers spend almost £12,000 on stamp duty on average as they move up the property ladder, research has revealed.
And the figure is rising. In the year to March 2014, collectively they spent around £5.6 billion on stamp duty in England and Wales - up by £900 million from the same period in 2013, according to Lloyds Bank.
The current £12,000 per homebuyer figure is based on the assumption that homeowners stay in their homes for just under eight years and move three times in their lifetime.
The research looked at people who had bought their first property in 1998 and then moved up the housing ladder in 2006 and 2014.
Unsurprisingly, homeowners in London were particularly stretched, with those who first bought a home in 1998 spending on average more than £38,000 in stamp duty - three-and-a-half times more than the average for England and Wales. This compares with a lifetime cost of £16,500 in the South East, £11,500 in the South West, £10,000 in the Midlands and just £3,718 in Wales.
The proportion of home movers in England and Wales paying stamp duty has increased more than fivefold since 1998 when 17% of buyers paid the tax - compared with 83% in 2014. In London, the figure is even higher, with 99% of buyers now paying stamp duty.
If stamp duty thresholds in 1998 had been raised in line with average house prices rises, and assuming the same banding was applied, the 0% rate would have gone up from £60,000 to £155,000 in 2014, while at the top end of the market, the 3% band would now be £1.29 million.
Marc Page, Lloyds Bank mortgages director, at Lloyds Bank, said: "Stamp duty bills continue to increase each year as house prices rise. The average home mover now pays nearly £12,000 during their life as they make their way up the ladder. This just goes to show that, unfortunately, some dreams still come with a price tag so homeowners need to carefully consider total costs of moving."
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.