Yorkshire Building Society calls for budget stamp duty changes

New research reveals that almost three-quarters of first-time buyers paid stamp duty on their first property purchase in 2016, a massive spike compared to just over half 10 years before.

Yorkshire Building Society is calling the threshold at which stamp duty becomes due to be raised from £125,000 to £175,000 in next week’s budget because it is prohibitive to first-time buyers, a call that reinforces our own findings.

In November, a WhatHouse? survey found strong support for the abolition of stamp duty from our readers.

The research found that 74% of first-time buyers had to pay stamp duty last year, compared to just 53% a decade earlier, the last time the threshold was raised to keep up with house price inflation. In that time house prices have increased by 35% and net household income had fallen by 1% in real terms.

The building society is asking for stamp duty to be made into a seller’s tax as first-time buyers find it increasingly difficult to find a property worth below £125,000. This is even more difficult in the south of England and almost impossible in London.

The Yorkshire Building Society argues that by making it a seller’s tax, first-time buyers would have a significant barrier to home ownership removed and it would also it would provide a jolt further up the ladder that would help second-steppers.

The research found that first-time buyers in the UK could save an average of £3,625, while Londoners could save £13,171. This changes to an average of £4,154 or £9,762 in London for those moving up the property ladder.

By raising the threshold to £175,000, a similar proportion of first-time buyers would be affected as in 2006.

Andrew McPhillips, Chief Economist at Yorkshire Building Society, said: “In its present form, stamp duty does not suit today’s housing market - it pushes up costs for those looking to buy, exacerbating affordability issues in a market where prices have vastly outpaced wage growth.

“Levying the charge against sellers rather than buyers will help to reduce costs for first-time buyers, helping more people to get on the property ladder. It would also help those moving up the property ladder, enabling them to move to a more suitable property and potentially freeing up smaller homes for first-time buyers to purchase.

“Although this would help to alleviate some of the effects of the housing crisis, it does not address the root cause which is the lack of supply. The government should implement the proposals in their recent White Paper and go further to boost housebuilding so that there are enough properties available for people to buy.”

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