Money News
New figures from the Halifax show the average first time buyer (FTB) now paying stamp duty land tax nearly everywhere in the South. The mortgage bank compared the average residential stamp duty bill for FTBs in 342 Local Authorities (LAs) in Great Britain over the period 2002 to 2007. It found the average FTB paid stamp duty in 2007 in 99% of local authorities (LAs) in the south compared to 42% of LAs in the north.
What's more, the average first time buyer in 19% of LAs in the south paid stamp duty at the higher rates of 3% and 4%. Meanwhile, the average FTB in 62% of London boroughs paid stamp duty at the higher rates in 2007.
The stamp duty bill for the average FTB in the UK in 2007 was £1,751; £791 (82%) more than paid in 2002 (£960), while the stamp duty bill for the average FTB in Greater London in 2007 was £8,675; £6,807 (364%) more than paid in 2002 (£1,868).
Put another way, the average FTB's stamp duty bill in London was equivalent to 21% of annual gross full-time average earnings in 2007 compared with 6% of earnings for the UK as a whole.
The average FTB house price was less than £125,000 - with no stamp duty bill payable - in four regions of the UK in 2007. These regions were the North (£114,959), Yorkshire & the Humber (£119,718), Scotland (£123,072) and Wales (£124,259). Outside the South of England the highest stamp duty bills for the average FTB in 2007 were in Daventry in the East Midlands (£1,853) and Harrogate in Yorkshire (£1,843).
Martin Ellis, Chief Economist at Halifax, commented, "Stamp duty has again become an issue for first time buyers because the stamp duty thresholds have not kept pace with house price inflation.
"The government has raised the 1% threshold in recent years; unfortunately, more needs to be done. We call on all political parties to raise the stamp duty thresholds to compensate for house price inflation over the past decade and to commit to index the thresholds for house price inflation in the future."
The point is certainly worth making, given that if the lowest stamp duty threshold had been increased in line with house price inflation since March 1993, it would now stand at £191,000. This would be £66,000 above its current level of £125,000.
If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 - when the £250,000 and £500,000 stamp duty thresholds were introduced - they would now stand at £720,000 and £1,440,000 respectively.
And just to prove what a nice little earner the tax has been for the Government total stamp duty land tax revenue from residential property sales rose by 40% (£1.8 billion) in 2006/07 to a record £6.4 billion. Over the past five years annual residential stamp duty revenue has more than doubled with a 140% rise from £2.7 billion in 2001 / 02 to £6.4 billion in 2006 / 07.
Estimates of residential stamp duty revenue for 2007 / 08, based on government projections in the Pre Budget Report, are for a 14% rise to £7.3 billion, followed by a 4% rise in 2008 / 09 to £7.6 billion.
10 March 2008 © Moneyextra.com
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