Date Published 06 February 2013
Around 80,000 house purchasers in England and Wales could find their Stamp Duty bill triples this year.
The prediction comes from property fund London Central Portfolio, and is based not on published Land Registry monthly prices but on the bespoke price survey purchased by LCP itself.
LCP says that the rise in Stamp Duty would affect 10% of the market, as the average property price looks set to breach the £250,000 mark.
For these buyers, Stamp Duty Land Tax will jump from 1% to 3%, an increase from £2,500 to £7,500.
LCP says that ministers will need to urgently re-evaluate the 1% Stamp Duty ceiling which has remained unchanged for over 15 years whilst – again, according to Land Registry quarterly prices – the average price of a house has increased threefold from £79,242 to £249,958.
The Land Registry quarterly house price data shows that last year, property prices in England and Wales rose 0.75% to £249,958. A similar slight increase this year would bring the average property price above the £250,000 threshold.
LCP chief executive Naomi Heaton said: `Should the band not be reassessed, there are two possible consequences. A bunching will occur at £250,000 which will prohibit the fragile recovery of the market, depressing house prices with the frightening prospect for negative equity and even repossessions.
`Home owners might also choose not to ‘trade up’.`
She said that the Halifax and Nationwide house price surveys put their own average prices well below the quarterly averages of the Land Registry.
She said, that as such, `the Chancellor might be completely unaware of the Stamp Duty knife edge which average prices are teetering on`.
Heaton added: `The Chancellor must move quickly to reassess the UK’s Stamp Duty situation. A recovery in the domestic property market will only be good news if the 1% Stamp Duty ceiling is also raised.
`For any buyer, finding an additional £5,000 is a big ask, especially in the current climate, and for first-time buyers, it could be the difference between renting and owning.`