‘Make stamp duty fairer’: Major lender urges Osborne to make radical changes
George Osborne has been urged by Nationwide to make changes to stamp duty
The Nationwide has written to George Osborne urging him to include plans to raise the thresholds at which the levy becomes due in his Autumn Statement tomorrow on future economic plans.
It says the duty imposes such a significant cost on ordinary home buyers that many are put off moving, causing log jams in the housing market.
The call echoes the Daily Express End The Stamp Duty Rip-Off crusade.
Stamp duty does not apply to properties under £125,000.
We need stamp duty thresholds increased to better reflect rising house prices, as well as the introduction of an escalator so that those thresholds continue to adjust automatically in the future
But after that buyers pay one per cent of the purchase price on properties costing up to £250,000.
From £250,001 to £500,000 the rate is three per cent and thereafter four per cent up to £1million.
Even higher rates apply above that.
The one per cent stamp duty threshold was last increased in 2006.
Had the thresholds kept pace with booming house prices since they were set, the one per cent stamp duty starting point would rise to £145,000, the three per cent rate would come in only of properties worth £295,000 and above and the four per cent threshold would be £590,000.
The Chancellor is being put under pressure to change stamp duty
Nationwide says the way stamp duty is worked out should be also changed.
The bill is calculated on a “slab structure” rather than on a sliding scale – so whatever a property costs between £250,001 and £500,000 a buyer pays three per cent of the entire value, not just three per cent on the portion that goes over the £250,000 threshold.
So someone buying a home for £300,000 pays £9,000.
Nationwide said instead the duty should be charged on a sliding scale so a buyer would pay one per cent between £145,000 and £295,000 and three per cent only on the final £5,000, giving a stamp duty bill of £1,650.
Graham Beale, the Nationwide’s chief executive, said: “Stamp duty now impacts tens of thousands of people every year, incurring a bill of almost £2,000 for those buying a home at the UK average price of £190,000, with the cost increasing threefold for properties costing more than £250,000.
“Our own figures demonstrate the distortion that the current slab thresholds create and highlight the fact that a sale price even £1 over each threshold can result in a hugely inflated bill.
“This additional cost may even be discouraging some from moving altogether.
“We need stamp duty thresholds increased to better reflect rising house prices, as well as the introduction of an escalator so that those thresholds continue to adjust automatically in the future.
“This would make stamp duty clearer and fairer for everyone.”