Conveyancing Experts Call For Changes To Help Buyers After Government White Paper Fails To Cover Stamp Duty

Specialist conveyancing lawyers are calling for a review of stamp duty thresholds to both ensure potential first-time buyers are not being “priced out” of the property market and also prevent shockwaves from being felt further up the ladder.

The property experts at Irwin Mitchell made the call after an analysis of the latest data from Halifax revealed the average first home now costs £200,000, which in turn has seen the number of first-time buyers who paid stamp duty double from 121,455 in 2013 to 238,382 in 2016.

Following the release of the research, law firm Irwin Mitchell’s Conveyancing team has urged ministers to launch a review of the current stamp duty thresholds, with the aim of improving affordability for those struggling to get on the property ladder. The Government launched a white paper this week aimed at boosting the housing market but it does not review stamp duty thresholds.

Expert Opinion

“Despite there being efforts to reform this area just three years ago, it is clear that the combination of rising house prices and stamp duty requirements have left many prospective first-time, and second step, buyers facing a real challenge.

“A review of the thresholds currently in place is the only sensible way forward to prevent a growing number of people from being priced out of the market. There were encouraging new measures announced in the Government’s housing white paper which admitted the market was ‘broken’.

“It must be remembered that failing to address these issues could have a significant knock-on effect for everyone on the property ladder, preventing people from being able to move house and impacting on the economy as a whole. Getting more first-time and second step buyers moving will help the rest of the housing market to flourish.” Helen Hutchison - Partner & Chartered Legal Executive

Need a holiday?

Current thresholds mean stamp duty is not paid on properties valued at £125,000 or less, with a rate of 2% then being introduced on homes between £125,000 to £250,000 and further rates for higher-value properties.

According to Irwin Mitchell’s conveyancing experts, one potential approach to improving affordability could be to change thresholds to reflect the rise in property prices. 

Expert Opinion

“Back in 2010, the government chose to temporarily remove stamp duty on homes valued at £250,000 or less, which was a welcome boost for many young people looking to take their first steps into the property market.

“With the average first property now costing around £200,000, there appears to be a strong case for revisiting such an approach and giving the housing market as a whole a major and timely boost. The current stamp duty thresholds need to be reviewed to keep pace with the rise in house prices.” Helen Hutchison - Partner & Chartered Legal Executive

Other issues to consider?

Helen added that another area which could benefit from further investigation is the stamp duty surcharge, an extra cost added to existing rates when someone chooses to buy an additional property.

Expert Opinion

“The current surcharge system sees a percentage increase added to existing rates when a person buys another property anywhere in the world. This may be somewhere you plan to use as a holiday home, a buy-to-let property or even a property you plan to move in to at a later date.

“For example, on any additional property worth between 125,000 and £250,000 an additional surcharge of 3% is charged on top of the existing stamp duty rate of 2%.

“Obviously this has had an impact on a huge number of people looking to purchase another property and we have heard first-hand many accounts from those forced to withdraw from a transaction as a result of the impact of the tax.

“All in all there is clearly much to be considered up and down the stamp duty system, whether it is to help those looking to take their first steps or others seeking to invest further in housing.” Helen Hutchison - Partner & Chartered Legal Executive

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