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 New stamp duty barrier broken

 

Wednesday, March 22, 2006


The average price of a detached house has passed the £250,000 barrier in half of the UK's regions, meaning buyers have to pay stamp duty at 3%, research has shown.

A detached home now costs more than the £250,000 threshold at which the 3% stamp duty rate applies in the North West, West Midlands, East of England, South East, South West and London, according to Halifax.

At the same time the average cost of any property in London is now £257,120, meaning buyers would have to pay stamp duty at the 3% rate, handing over an average of £7,714, compared with £1,535 five years ago.

Halifax said five years ago the only place where the average cost of a detached home was above £250,000 was London, but now the average detached property in the city cost more than £500,000, meaning buyers would have to pay stamp duty at 4% of the property's purchase price.

The group said there had been a three-fold increase in the amount of stamp duty the government received since 1999/2000, with the figure soaring from £1.8 billion to £5.5 billion in 2004/2005.

It said the main reason for the increase was that more and more properties were falling into the higher thresholds at which stamp duty is paid at 3% or 4% as these thresholds had not been increased for more than eight years.

During the past five years there has been a 364% rise in stamp duty revenues from properties in the 3% band and a 246% rise in money from ones in the 4% band.

It added that nearly two-thirds of the extra revenue had been raised from southern England, with London and the South East accounting for 40% of the total.

Last year the government doubled the threshold at which stamp duty kicks in from £60,000 to £120,000.

People buying a property for between £120,000 and £250,000 pay stamp duty of 1% of the property's price, rising to 3% for homes worth more than £250,000 but less than £500,000, while for ones worth more than £500,000 it is charged at 4%.

 
 
     
     
 

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