Stamp Duty Cost Rising as Houses Prices Push Into New Bracket
Despite the increased demand for remortgages, there are many UK homeowners that are choosing to move home. According to the research submitted by Lloyds Bank, homeowners spent £6.6 billion last year to move home and the amount for 2014 is in line to beat that level.
Those moving are facing higher stamp duty costs with a reported average increase of £2,000 at £8,248.
Buyers of homes, whether homeowners moving home or first time buyers, are finding that house prices are on the rise. Demand has pushed house prices upward to the point that many are being pushed into a higher stamp duty bracket.
London is the most expensive area for home movers with an average stamp duty cost of £10,850 and an average in estate agency fees of £6,510. For Scotland the average moving cost is £6,219 while in Wales it is an average of £7,395. Northern Ireland is the most affordable for home movers at an average of £4,253. Northern Ireland still has house prices that have yet to reach a momentum as in other areas of the UK which makes buying there much more affordable as well.
House prices have increased in the UK by 9.1% compared to last year with a new average high of £253,000 according to the Office for National Statistics (ONS).
Marc Page, Lloyds Bank mortgages director, said, “The cost of moving can be an expensive one, and rising house prices have had an impact on this with more property sales now within higher stamp duty brackets.
“On top of the costs of moving, home movers also need to consider the costs involved with changing mortgages, such as product and administration fees.”
Critics of the current stamp duty structure argue that with sales of homes up to £125,000 free of stamp tax duty and those up to £250,000 costing 1% but then rising to 3% at £250,000 to £500,000 will mean that many of the current properties available on the market will require a stamp duty tax that will make buying difficult. According to the TaxPayers’ Alliance three in ten homes have pushed to the higher stamp duty bracket in five years’ time.
The argument is that while house prices are on the rise the cost of getting into a new home must be kept affordable. A strong housing market is crucial to a healthy economy.