Coventry Building Society calls for stamp duty reform as homebuyers hit with ‘barrier’ tax
Coventry Building Society is calling for stamp duty reform
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Coventry Building Society is calling for politicians to reform stamp duty reform ahead of the next General Election on July 4.
According to the latest figures from HM Revenue and Customs (HMRC), homebuyers paid £957million in the “upfront tax bill” during April.
Since January 2024, homebuyers in the UK have paid £3.4billion in stamp duty which is a £191million reduction from the same period last year.
The tax is paid by homebuyers when the property being purchased costs over a certain amount.
This could be partially responsible for the lower number of property transactions reported so far this year.
Latest figures suggest there were 17,000 fewer property transitions in England throughout the first quarter of 2024.
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Stamp duty has been slammed as a "barrier" tax
GETTYAs it stands, those buying property have to pay stamp duty if their home costs over £250,000.
However, this threshold will fall to £125,000 which will take the tax bill on the average priced home from £3,386 to £4,886.
This will come into effect from March 2025, as well as other changes which will impact those getting onto the ladder for the first time.
As it stands, first-time homebuyers pay the tax if their property costs more than £425,00 but this will fall to £300,000.Following last week’s inflation figures, Coventry Building Society is noting this could lead to a wave of new homebuyers buying on the market.
The Consumer Price Index (CPI) rate eased to 2.3 per cent for the 12 months to April 2024, according to figures from the Office for National Statistics (ONS).
Interest rates have been raised by the Bank of England due to historic high inflation with the base rate sitting at 5.25 per cent.
This has pushed mortgage rates up which has led to homeowners paying more in repayments.
Furthermore, this has discouraged many from attempting to get on the property ladder but Coventry believes this could change.
Jonathan Stinton, the head of Mortgage Relations at the building society, said: “The hope of base rate reductions could prompt more potential buyers to think about moving, but the upfront tax bill could still be a huge barrier they struggle to get around.LATEST DEVELOPMENTS:
Interest rate hikes have pushed up mortgage repayments for many GETTY “Paying thousands of pounds in Stamp Duty could easily disincentivise any would-be buyers and keep people from moving up and down the ladder as freely as they would like.
“It could cause a prolonged sag in the market, which then prompts drastic measures to get it moving again, resulting in another boom/bust cycle – like we saw with the 2020 Stamp Duty holiday.
“Previous Stamp Duty changes haven’t stood the test of time – they’ve been quick fixes which have only helped buyers in the short-term.
“Now is the time for carefully considered reform, taking into consideration some of the issues facing buyers and sellers, with the aim of building long-term stability rather than a sudden sharp boost in numbers.”