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Buyers face 'punitive' stamp duty
Two in five potential home buyers will face paying at least £7,500 in "punitive" stamp duty costs by 2018 as the property market recovers, a report has warned.
As house prices pick up, four out of every five homes sold in 2012-13 in England and Wales will be subject to the stamp duty land tax within five years, found research for the TaxPayers' Alliance.
It warned that 40% of homes sold by this time will be subject to stamp duty of 3% or more, leaving buyers with a bill of £7,500 or more.
Some 99% of homes in London will be liable for stamp duty in five years' time and in the North West this figure will be three in five, the pressure group warned. It predicts the East Midlands will see the fastest increase in the number of homes liable for stamp duty, from around half to just over seven in 10 by 2018.
Meanwhile, three in five homes in the South East and one in six homes in Wales will be subject to stamp duty rates of 3% or higher by 2018, the research found.
The TaxPayers' Alliance recently launched a Stamp Out Stamp Duty campaign calling for a cut in the levy, which raised £4 billion for the Treasury in 2012/13. Its findings are based on property price growth forecasts over the next five years by Savills Research, using Land Registry sales figures as a base.
Sales of homes are free of stamp duty up to the value of £125,000 and attract a 1% tax above this level and up to £250,000. But rising house prices as the housing market gathers pace mean that more purchasers face paying at the higher rates of 3% applied to homes worth over £250,000 to £500,000, 4% on those valued at over £500,000 up to £1 million, 5% on those over £1 million to £2 million and 7% beyond that point.
Three in 10 homes will have moved up into another stamp duty bracket in five years' time, the report predicted.
Stamp duty is imposed on the total value of the property rather than just the portion of the price which is above the threshold. This means families buying a home for between £250,000 and £500,000 pay between £7,500 and £15,000.
Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "High stamp duty rates stop young people buying a home and starting a family, discourage elderly people from downsizing and make it harder to move to a new place for a new job. The Government urgently needs to cut stamp duty and ease the burden before the situation gets even worse."