Buyers fork out for stamp duty on first homes

MORE than a quarter of first-time buyers are now paying stamp duty, after rising house prices soared as tax thresholds stayed frozen.

The surge in property prices has dragged thousands of buyers into higher tax brackets, and almost tripled the number of first-time buyers paying stamp duty, new analysis shows.

House prices in England have grown by £94,178 since December 2014 – when stamp duty bands were last adjusted – according to the Office for National Statistics. In this period, the stamp duty bill on the average home has risen by 211 per cent, from £1,567 to £4,876.

The Government started first-time buyer’s stamp duty relief in 2017, meaning first-time buyers paid no stamp duty on the value of a property purchase up to the first £300,000, if its value did not exceed £500,000.

Yet since then, the number of firsttime buyers paying stamp duty has almost tripled. HM Revenue and Customs data show that since 2017 the number of those who claim the relief but still pay tax has risen from 4,700 to 12,700. Since the start of 2019, the share of firsttime buyers who qualified for relief but still paid tax rose from 21 to 26 per cent.

Paula Higgins, of Homeowners Alliance, called for an urgent stamp duty review. “There is a real risk first-time buyers will become a taxation cash cow,” she said.

It comes as those facing rising mortgage rates pay exit fees to end one deal and enter another. Yorkshire Building Society recorded an 88 per cent rise in the value of “early repayment charges” on its mortgages so far this year, compared with the same period in 2020.