Coventry Building Society‘s analysis of the latest HMRC figures reveals that UK homebuyers have paid a substantial £9.8bn in Stamp Duty for the first 10 months of the year.
As expectations rise for the Autumn Statement, the society has suggested several ways the Chancellor could improve conditions surrounding the tax.
Firstly, the analysis suggests the need for long-term support instead of temporary relief.
Recent changes to Stamp Duty have been temporary, causing uncertainty for homebuyers as relief periods expire.
The current tax thresholds, starting at £250,000, are set to drop to £125,000 in March 2025, resulting in an additional £2,500 on the tax bill for an average-priced home.
Another point of consideration is adjusting tax thresholds for inflation. Stamp Duty on an average-priced home in England has more than doubled from £1,333 in 2014 to the current £2,980.
The lack of adjustment for inflation in tax thresholds has led to a misalignment with the rise in house prices.
The analysis also emphasizes the importance of supporting downsizers. The existing tax regime does not cater to downsizers, potentially discouraging them from moving to properties that better suit their needs.
This lack of support may reduce the availability of homes suitable for larger families.
Consistency in first-time buyer relief is another area highlighted.
First-time buyers face varying Stamp Duty percentages if the property exceeds £425,000. However, joint purchases with a next-time buyer result in the loss of all first-time buyer relief.
Addressing regional discrepancies is crucial, as Stamp Duty bills for an average-priced home in London are £14,279, a stark contrast to the £40 faced by buyers in the East Midlands.
This regional tax discrepancy, where London’s tax bill is 356 times higher despite the property price being only 2.11 times higher, needs urgent attention.
Lastly, the analysis suggests incentivizing energy-efficient improvements through Stamp Duty.
This approach could help reduce energy bills and enhance the Energy Performance Certificate (EPC) ratings nationwide.
Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society, said: “The right changes to Stamp Duty could make a huge difference to homebuyers; it could not only put money back in their pockets, it could also oil the wheels of the market and make it easier for people to move up and down the ladder throughout their lifetime.
“And tax returns during the Stamp Duty holiday in 2020 and 2021 proved changes which stimulate the market don’t have to be too costly for the Treasury.”
He continued: “The go-to solution has been temporarily changing the thresholds, but there’s a risk that they become out of sync with house prices in a few years, and they don’t address other issues like support for downsizers or the vast regional tax discrepancies.
“A considered review from the Chancellor, rather than a temporary holiday or simplistic cut to rates, would have a greater and longer-lasting benefit to buyers and sellers.”
