The government has been accused of using stamp duty as a cash cow, after adding thousands of pounds to the cost of buying property following last week’s budget announcement.
Homebuyers will be hit by a 148% hike in their stamp duty bill as Rachel Reeves pushes ahead with a stealth property tax raid.
The stamp duty bill is to surge by £4,412 by the end of this parliament after the chancellor last week moved to reduce support for property purchasers.
It means the average bill in England will rise from £2,979 this year to £7,391 in 2029, according to analysis by Hamptons.
There was bad news all round when it came to stamp duty in the budget last week.
While first-time buyers were hit by the government’s decision not to extend the relief on stamp duty for people buying their first home, buy-to-let investors were left disappointed at the need to now pay an additional 2% stamp duty surcharge.
The Conservatives raised the threshold for when first-time buyers pay stamp duty from £300,000 to £425,000 in 2022, but the new Labour government last week opted against extending this tax incentive.
The threshold for other home buyers, which was doubled from £125,000 to £250,000 under the Tories in 2022, will be reversed back to the lower level from 31 March.
Meanwhile, second home buyers, including buy-to-let investors, in England and Northern Ireland have seen the rate they pay in stamp duty surcharge increase from the old rate of 3% to 5%.
At the same time, the Treasury’s haul from property taxation will double from £12.8bn in 2023 to 2024 to £25.4bn in 2029 to 2030, according to the Office for Budget Responsibility (OBR).
The bulk of this figure is made up from stamp duty receipts in England, but the figure also includes devolved property transaction taxes (such as Scotland’s Land and Buildings Transaction Tax) and the annual tax on devolved dwellings.
Hamptons’ calculations were based on how much house prices would rise over the next five years, according to the OBR’s forecasts released last week.
The OBR expects house prices will rise by 0.9% next year, 2.1% in 2026, 2.8% in 2027 and 3% in both 2028 and 2029 respectively.
Lucian Cook, the head of residential research at Savills, said stamp duty is a tax that has a “stealth nature”.
“It has become something of a cash cow for them [the Treasury],” he said.
Stamp duty changes could have sizable implications for many homebuyers
