The proportion of First Time Buyers who face paying Stamp Duty could more than double if Labour win the General Election, according to new data.
Comparison site reallymoving have said with 36% of first time buyers in England and Northern Ireland exceeding the Stamp Duty threshold under Labour, versus 15% under the Conservatives.
The property price threshold at which Stamp Duty kicks in for first time buyers was temporarily raised in Liz Truss’s 2022 mini-Budget from £300,000 to £425,000. In their manifesto, the Tories have pledged to make the higher rate permanent whilst Labour has not, indicating it would revert to the previous £300,000 threshold from April 2025.
Reallymoving founder and CEO, Rob Houghton, said: “The fact that so far Labour haven’t matched the Conservatives’ policy to make the current higher Stamp Duty thresholds more permanent, will be worrying many First Time Buyers hoping to get on the ladder in the next couple of years. If Labour win, some may well attempt to bring their plans forward if finances will allow, to try and exchange contracts before the end of March next year. In London especially, the potential savings – at over £6,000 on average – are considerable.
“Our research shows it already takes the average First Time Buyer nearly 6.5 years to raise the funds needed to buy a home, rising to 8.5 years in London, and it will take even longer if Stamp Duty thresholds are lowered once again.
“Whichever party wins the election, immediate and meaningful help for First Time Buyers must be one of their top priorities.”
According to data from reallymoving, the average first time buyer purchase price in England is currently £283,000, meaning no Stamp Duty is payable. However, First Time Buyers in the South East pay £318,000 on average, rising to £451,000 in London, meaning thousands more buyers could potentially have to pay the transaction tax or face higher bills under a Labour government according to the comparison site for hombuyers.
Due to lower property prices, very few first time buyers in the North of England and Midlands currently pay any Stamp Duty on their purchase. In the North East and Northern Ireland, just one per cent exceed the current £425,000 threshold, whilst in the East Midlands and Yorkshire & the Humber it’s two per cent and three per cent in the North West and West Midlands.
Under Labour, if the lower £300,000 threshold is reinstated next April, fiver per cent of first time buyers in the North East and Northern Ireland would have to pay the tax, 13% in the East Midlands, 12% in the North West and 14% in the West Midlands, reallymoving say.
In London the numbers are ‘starker’, with 80% of first time buyers liable to pay Stamp Duty if Labour form the next government, compared to 49% currently. Based on an average FTB purchase price of £451,088 in the capital, the typical Stamp Duty bill could rise from £1,304 currently to £7,554. In the South East, the proportion paying the tax would rise from 17% to almost half (48%), the data suggests.
2 responses
£0 stamp duty for first time buyers is merely a gimmick and does little to solve the housing crisis. We all know that the stamp duty rates need a permanent overhaul and house prices are too high. £0 stamp duty for first time buyers really was only put in place to ensure that the political parties attracts voters and show that they are seemingly on the side of the younger generation. However, if Labour are not committing to stamp duty incentives but people are still voting for them, then clearly it is not as important as some might like to make out.
Fiddling with this archaic tax does little to help the housing market and provide permanent solutions to the crisis facing the industry. Political parties should not be campaigning on this gimmick and I would welcome long term sustainable plans even if it perhaps means some pain short term. Frankly, until the system is provided a permanent overhaul, I think we should be back to the standard rates pre-2015 but with significantly higher amounts payable for overseas buyers.
I agree it would be more sensible to significantly raise the rate for overseas buyers. Many of these purchases are for money-laundering purposes and not for occupation. This further reduces property availability and increases prices.