Speculation is rife over whether Phillip Hammond will make changes to stamp duty in the Autumn Budget as research reveals up to 45,000 homebuyers are blocked by the tax.
Chancellor Phillip Hammond is under pressure to cut the rate of stamp duty to zero for all first-time buyers on Wednesday in a bid to stimulate the property market.
With 45,000 transactions each year being prevented by the tax, analysis from the Centre for Economics and Business Research also found that around 146,000 sales had been blocked by stamp duty since 2012.
HomeOwners Alliance chief executive Paula Higgins said that she wasn’t surprised by the results.
“A break for first-time buyers would be a clean move and would help thousands of renters onto the ladder,” she said. “People desperately want to get on the ladder because the country is set up for homeowners, not renters. However, the government will need to think about preventing abuses and will probably have to install a cap at around the same level as the Help to Buy scheme. It should also go for a staggered approach to avoid distorting the market.”
Stifled by stamp duty
The level of stamp duty doesn’t only affect first-time buyers, though. Older generations looking to downsize, as well as those just wanting to move, are also stung by the effects of a higher rate of tax.
Santander’s Miguel Sard said: “First-time buyers struggle to get on the ladder, young families want to move up it and the elderly want to downsize, but all are stifled by stamp duty.”
Figures released in September showed that the amount of revenue generated from stamp duty had rocketed by 18% over the past year, but the number of transactions had fallen by 8%.
Nick Leeming of Jackson-Stops estate agents said that the property market had seen a “real drag” because of stamp duty over the last 12 months.
He said: “While the changes seen in December 2014 appeared to be good news for 98% of homebuyers at the time, the top end of the market has suffered and this, together with the additional 3% tax surcharge, has had a knock-on effect on the rest of the market.”
Stamp duty is currently only paid on owner occupier properties worth £125,000 and above, but with the average UK home now valued at £226,367, it has become increasingly difficult to avoid the tax.
