Property tax costing first-time buyers
First-time buyers are paying too much stamp duty, according to the Conservative Party.
10:19 22 November 2004
The Conservative party said that the average first-time buyer is paying 1,170 more in tax on their property than when Labour came to power.
The hike is due to the current stamp duty regime, which has not moved with increasing house prices and was increased four times in Labour's first four budgets.
Barring some exceptions, stamp duty is paid on properties worth more than 60,000 at a rate of one per cent. This trebles on houses costing more than 250,000 and for properties worth more than 500,000 purchasers pay four per cent.
Without exception all properties worth more than 150,000 pay stamp duty.
In 1997, the year the Labour Party came to power, the average house price was 76,103. According to the latest Land Registry figures the average house in the UK now costs a staggering 187,971.
The Conservatives point out that if the threshold for stamp duty had risen in line with house prices, stamp duty would not apply until a property was worth 143,000.
"Stamp duty adds another burden to house-buyers at a time when their budgets are at their most stretched. It is particularly hard on first-time buyers trying to get a foot on the property ladder," said shadow Chancellor Oliver Letwin.
The Council of Mortgage Lenders agrees that the current tax system is antiquated. CML's deputy director general Peter Williams commented: "Three-quarters of first-time buyers now have to pay stamp duty, a complete reversal from 1997 when three quarters of first-time buyers bought properties below the threshold.
"Without a change in approach, the tax burden on home-owners will continue to grow year after year."
Plans released by the Conservatives today to tackle this burden include:
- exempting first-time buyers from stamp duty to help them get on the housing ladder;
- linking the stamp duty threshold to house prices;
- doubling the lower stamp duty threshold to 120,000;
- and replacing the 60,000, 250,000 and 500,0000 thresholds with a graduated system.