First-time Buyers Face £1,458 Stamp Duty Bill

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First-time buyers face £1,458 stamp duty bill

By Gary Cleland

Last Updated: 1:45am BST 09/07/2007

First-time buyers are paying an average of £1,458 in tax to get on the property ladder - up from near zero when Labour came to power.

Research from the centre-Right think tank, Policy Exchange, shows increasing numbers of first-time buyers are having to pay stamp duty.

In the week Prime Minister Gordon Brown is expected to outline plans to help first-time buyers, the research claims his tax regime as Chancellor exacerbated the problem.

Although the Government more than doubled the stamp duty threshold from £60,000 in 1997 to £125,000 now, it failed to keep up with soaring house prices.

In 1997, only first-time buyers in central London would have expected to pay stamp duty. Last year, the average first-time buyer paid stamp duty in six of England's 10 regions. It has led to a windfall for the Government, with its stamp duty take rising from £675 million in 1997 to £4.6 billion last year.

Oliver Marc Hartwich, the chief economist at Policy Exchange, said: "It is a normal human aspiration to want to own your own home, but that is now all but impossible for a large number of young people.

"The main reason is soaring house prices, but the Government has made it even more difficult for first-time buyers by presiding over a regime of rising stamp duty."

The research outlines regional variations in the amounts paid. In central London, the average first-time buyer paid £2,433 last year. In the West Midlands they paid £1,298.

"The Government cannot directly control house prices, but it does control stamp duty and it should help first-time buyers by cutting it or even abolishing it altogether," said Dr Hartwich.

A Treasury spokesman said: "The Government has more than doubled the starting threshold rate for stamp duty to £125,000.

"This will mean an extra 310,000 homebuyers in 2007/08 will pay no stamp duty, and close to half of all first-time buyers and around two-fifths of all home buyers will pay no stamp duty in 2007/08."

Source: http://www.telegraph.co.uk/news/main.jhtml...09/nduty109.xml