These shocking figures are a result of significant house price growth over the last decade, which has seen the average UK house price almost triple from £68,777 in Q3 1997 to £198,898 in Q3 2007.    Stamp duty thresholds have failed to take into account this house price boom, causing the stamp duty bill on the average UK home to increase from £688 in 1997 to £1,989 in 2007.

Paul Chafer, Sales and Marketing Director from Stroud & Swindon Building Society comments:

“These worrying figures highlight how stamp duty has become so out of touch with the housing market, salaries and the economy as a whole in recent years.  As the research reveals, stamp duty has outstripped the rise in annual salaries by more than five times - which is something the Government must review.  Not only is this tax making it more difficult for first time buyers to get their foot onto the property ladder, but also adds an extortionate bill to those trying to move home.

“This must be put at the forefront of the Government’s agenda, and so it was very disappointing to see that - contrary to speculation - stamp duty was not mentioned in the Pre Budget Report. We call on the Government to raise the stamp duty threshold in order to take into account the astronomical house price growth that has occurred over the past decade. This includes raising the nil-rate threshold above the current rate of £125,000 to something more in line with current house prices such as £200,000.

“In addition, we would like to see stamp duty being treated as a proportional tax, such as income tax.  This would involve introducing a tiered interest rate where consumers are only taxed on the proportion of their property value that exceeds the stamp duty threshold.  By introducing such a scheme, the ‘price bunching’ effect that stamp duty can have around thresholds will be reduced, allowing properties to sell for their true values. 

“Introducing these changes will ease the home buying process for many consumers – especially first time buyers, and bring stamp duty more in line with current salaries. This change would be a key factor in preventing the stagnation of the housing market.”

To locate your closest branch visit www.stroudandswindon.co.uk
or call 0800 618161

For further information please contact:

David Greenleaf
Corporate Communications Manager
Stroud & Swindon
01453 768244

Lee Blackwell / Suman Katyal / Karen Butcher
The Wriglesworth Consultancy
020 7845 7900 / s.katyal@wriglesworth.com

Notes for Editors

Methodology:

• Data from the Halifax House Price database that is seasonally adjusted and arithmetic average prices of home in Q4 1997 and Q4 2007 was used to determine the average percentage increase over the tracked period.
• This was then compared to statistics available from the Office of National Statistics (ONS) for average UK salaries.  Any salary data that was not publicly available was developed using the RPI (Retail Price Index) of 3.17% against the latest available official statistics.
• SDLT thresholds and liabilities over the tracked period was determined using data from the Land Registry and average Halifax house prices.  The current structure of this tax is:

- Less than £125,000 – zero
- £125,00 < £250,000 – 1% on entire house price
- £250,000 < £500,000 - 3% on entire house price
- £500,00+ - 4 % on entire house price

• The average monthly take home salary was determined after all relevant tax allowances and national insurance had been taken into account.  This was then averaged across twelve months.

Stamp duty:

Salary Increases: