Just four per cent of homes on sale in London are exempt from “hefty” stamp duty charges, as fresh pressure is piled on the UK Chancellor to reform the levy ahead of the Spring Budget next week.
Tim Bannister, a property expert at Rightmove said stamp duty is a “big barrier to moving,” with some who would potentially consider a move likely put off by the “hefty stamp duty tax in addition to other moving costs”.
Stamp duty is a tax paid by the buyer of a residential property which costs over £250,000.
It ranges from between five to 12 per cent depending on how expensive the home is and whether or not a buyer is the owner of multiple homes.
Relief for first-time buyer stamp duty has been in place since the 2022 Mini-budget, but this is set to end in 2025.
This means reversing the changes where the threshold for full relief from paying stamp duty as a first-time buyer was raised from £300k to £425k.
Banninster explained: “At the very least the government should be thinking about making the current changes to first-time buyer stamp duty charges permanent, with the higher thresholds introduced in 2022 due to expire next year.”
“However, we think there is an opportunity to go a step further. With such regional variations in property prices, increasing stamp duty thresholds in line with these regional variations would seem a logical first step for stamp duty reform.”
He added: “Whilst longer-term supply measures are also needed, this could be one way to help first-time buyers trying to get onto the ladder in more expensive parts of England.”
Data published by the property portal today shows less than a third of London properties are currently exempt from stamp duty for first-time buyers, compared to nine in ten in the North East.
Homes in London have been traditionally more expensive than the rest of the country due to an increase in demand for places to live.
Calls for greater relief around stamp duty come as immense strain has been put on the UK property sector as prospective buyers struggle with affordability due to increased mortgage rates.
House prices are expected to fall by an average of two per cent this year, but they still remain around £40k more expensive than pre-pandemic levels.
An HM Treasury spokesperson said: “To get the market moving, in September 2022 we doubled the Stamp Duty Land Tax nil-rate band from £125,000 to £250,000, reducing bills for all home movers by up to £2,500 until 31 March 2025.
“We’re also supporting first-time buyers as they will be able to access up to £8,750 in relief over this period, meaning 77% of those claiming First-Time Buyers’ Relief currently pay no SDLT whatsoever.”