Stamp duty bills to double under Labour

Homebuyers face paying £10bn more in ‘ludicrous’ tax by 2030

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Labour’s stamp duty tax raid will see homebuyers pay some £10bn more in land duties by the end of the decade, analysis shows.
Rachel Reeves’s decision to revert stamp duty from 3pc to 5pc in her maiden Budget last month means receipts will jump from £8.6bn this year to £18.1bn by 2030.
It comes as Paul Johnson, head of the Institute for Fiscal Studies (IFS) think tank, called the tax rises in the Budget “ludicrous” and said his head “literally hit the table” when he heard land duties would rise.
Mr Johnson told the Times stamp duty was “the most damaging tax we have”, and warned that increasing it would make “things even more immobile and increase rents even further.”
Stamp duty is levied on the purchase price of a property – and the average bill has jumped from £5,600 in 2013 to £9,037 last year, according to Coventry Building Society.
The changes to stamp duty means anyone buying a second property faces an additional charge of £6,192, based on average house prices. Tax bills for landlords and holiday home buyers will also have an extra surcharge stacked on top.
In addition to raising the tax paid by homebuyers, Ms Reeves also opted not to extend the relief measures for those buying their first home, which were introduced by Liz Truss during her short-lived premiership.
Stamp duty remains a lucrative tax for the Treasury, which clawed back £19m from homebuyers last year.
Coventry Building Society calculated that stamp duty receipts would surge by 110pc, far outstripping the projected 41pc rise of residential property transactions over the same period.
The Office for Budget Responsibility predicts that house prices will rise by 15pc in the next six years, meaning the surge in stamp duty receipts “will be fuelled by the combination of more homes being bought at higher prices while thresholds fall to catch more buyers,” Coventry Building Society said.
Jonathan Stinton, of the firm, said: “The amount homebuyers pay in stamp duty is set to double by 2030 – that means a pretty hefty increase for anyone looking to buy a home over the next few years.
“Landlords already took the first hit when the 5pc surcharge came into effect overnight, and buyers across the board now have to brace themselves for the April cliff edge.
“These hikes are beneficial to the Treasury, but the balance needs to be just right so people aren’t dissuaded from buying homes. The health of the housing market is dependent on people being able to buy and sell fairly easily, which could be impacted if the tax burden becomes too costly to bear.”
The Conservative government previously increased the nil-rate threshold from £125,000 to £250,000, and from £300,000 to £450,000 for first-time buyers. However, this is due to expire in March.
Property website Zoopla estimates the lower thresholds will add an additional cost of £2,500 to 83pc of movers. Thresholds have not been adjusted for inflation, and rising property prices mean that the average stamp duty bill in England will rise from £4,412 to £7,393, according to previous analysis by estate agent Hamptons.
Experts have warned that Labour’s decision to axe stamp duty relief will exacerbate housing shortages, by discouraging downsizers and trapping would-be first-time buyers in a brutal rental market.
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Kirstie Allsopp, the property television presenter, has previously called stamp duty “a monster” and warned Ms Reeves’s threshold changes would cause “chaos”.
Hamptons estimates that nine in 10 movers will be pulled into paying the tax – up from just over half prior to the Budget.
The Government was approached for comment.
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