Stamp duty labelled ‘destructive’ after payments hit record high

 

The government made £9.5bn from stamp duty payments last year, the highest level ever seen in the UK, and it seems second homebuyers and landlords are bearing the brunt.

Stamp duty payments increased by £1.3bn year-on-year in 2017, with the average owner-occupier in the UK forking out £7,161 in taxes, according to data released by London Central Portfolio (LCP). This figure rose to a whopping £27,232 for the average property purchase in London, where house prices are well above the national average with a stamp duty bill to match.

Almost half of the total amount came from second homebuyers and landlords, who paid around £4.1bn, which is almost wholly attributed to the 3% surcharge which is added to the stamp duty costs for any additional property purchased aside from a main home.

This means that for a buy-to-let landlord investing in a property worth £300,000, the standard 5% stamp duty is applied, plus an additional 3%, bringing the total tax bill up to £14,000.

Last year’s autumn budget saw the end of stamp duty taxes for first-time buyers purchasing homes priced at £300,000 or less, which has proven popular with LCP recording a 7.4% increase in the number of first-timers getting onto the property ladder.

Does stamp duty need a rethink?

A large proportion of the overall takings also came from property millionaires, with properties worth £1m or more bringing in around £1.9bn of the Treasury’s total, despite this property type making up only 2% of all transactions last year.

Stamp duty has been criticised by a number of industry insiders as a restrictive tax, particularly since the 3% surcharge was introduced, amid fears that it could stifle the country’s housing market and put people off moving house.

Sam Dumitriu, of the Adam Smith Institute think-tank, said: “Stamp duty is probably the most destructive tax there is.

“People are stuck in houses that are too small or too big for them because they don’t want to pay a massive tax bill.”

Commenting on the high proportion of tax made up by second homebuyers and landlords, Naomi Heaton of LCP said: “With landlords making up almost half of all tax take, any new deterrent could start eating away at the public purse.” She added that the government’s latest policies targeting buy-to-let investors was a “dangerous gamble”.

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Stamp duty labelled ‘destructive’ after payments hit record high

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