Yorkshire Building Society is urging the government to reform stamp duty land tax so it is paid by sellers not buyers, removing the tax burden entirely for more than 225,000 people getting on the housing ladder every year.
The Society said that changing property tax rules in this way could save first-time buyers in the UK (excluding Scotland) an average of £3,791, with Londoners saving the most at an average of £13,171.
Based on putting away £250 per month, this equates to the average first-time buyer avoiding 15 months of saving, or four years and four months in London.
Yorkshire Building Society will outline the case for reforming stamp duty in a formal submission to the government today on what should be included in the Chancellor’s Autumn Statement due in November.
Those moving up the property ladder could also save £4,093 on average, rising to £9,762 in London.
A total of 225,200 first-time buyers paid stamp duty between June 2015 and June 2016, having purchased a property above the £125,000 minimum threshold, representing 75% of all first-time buyers.
The reform would lead to an additional 16,000 additional property sales in the first year, including 6,000 first-time buyers, based on a 2% increase in transactions.
New-build properties for owner occupation could be exempted from the rules, ensuring the supply of homes is not prevented by the additional tax.
Andrew McPhillips, chief economist at Yorkshire Building Society, said: “More than 200,000 first-time buyers paid stamp duty last year and removing this tax burden from them would give the younger generation a major leg up the property ladder. This would be felt most of all in London where on average our members pay a staggering £13,171 in stamp duty for a first home.
“The benefits would not only be felt by those looking to get on the property ladder as anyone moving up it would be better off too.
“The Prime Minister has pledged to make intergenerational support a key measure of her government’s housing agenda and this measure could achieve exactly that.
“This will not solve every cause of the housing crisis but reforming stamp duty could ease its effects by making homes more affordable.”
Stamp duty generated £7.8 billion for the exchequer between June 2015 and June 2016 and a 2% increase in transactions would generate an additional £156 million.
Average house prices have increased in real terms by 154% since 1990, and by 167% among properties bought by first-time buyers.
This is a not in the best interests of the sellers either as they need to move to a property themselves and will be liable for duty at a higher rate than the property they are selling. People selling that property will be reticent to do so and this will flatten the market because those people will be discouraged from attempting to move up the ladder and so the market will stagnate to a degree. The real answer is to abolish stamp duty altogether but greedy unaccountable politicians will not agree.This BS should keep quiet!!!