Stamp duty - perhaps a necessary evil

At last, a report that doesn’t blame estate agency fees for increasing the cost of moving. In fact fees or commission as it is known, has not risen for many years in percentage terms. It has only been house price increases and volume of sales that keep agent’s commission at a viable level. We cannot think of many trades or professions that have not increased their fees in real terms over the last 10 to 15 years. 

Commission is of course charged to sellers, but one of the really heavy moving costs is stamp duty and that is down to the buyer. Most people dislike paying tax and homebuyers spend an average £12,693 in total on stamp duty as they move up the housing ladder, according to the latest research.. A typical first time buyer would have paid an average stamp duty of £758 in March 2001, £1,989 for their second home in March 2009 and £9,946 for their final step in March 20171.

Homebuyers in England and Wales paid £8.3 billion in stamp duty in 2016, that is £1.2 billion  billion more than in 2015. This rise reversed the £571 million decline between 2014 and 2015, which resulted from the stamp duty reforms that came into place in December 2014.

The highest overall stamp duty bills are faced by buyers in London and the South East.  In London, homebuyers pay a total of £40,576, 320% more than the average for England and Wales.  In the South East, the overall bill is £20,133. The lowest bills are in the North (£4,212) and Wales (£4,489).

Other research findings show that the proportion of first time buyers paying stamp duty has risen in the past 16 years from 47% in 2001 to 78% in 2017. In Greater London, 100% of first time buyers face paying stamp duty with 98% of first time buyers paying the tax in the South East. The only region where fewer than half of first time buyers pay stamp duty is the North 41%.

However, owning your home has brought high financial gains over the years and while regular increases in value are not guaranteed, home ownership remains one of the best methods of building wealth. There are going to be costs attached whether it’s from estate agents, solicitors or the government. No pain no gain as they say, but stamp duty is the most disliked and there will always be calls for reform.

Notes:- Original stamp duty research by Lloyds Bank with input from MRC. All figures are subject to regional differences and property values may fall as well as rise.