65 per cent of the people buying a home in London in 2012-13 paid the 3 per cent rate of Stamp Duty or more. You can pay that rate on a one or two bedroom flat in the capital now.
But it would be a mistake to think that Stamp Duty is only an issue in London and its leafier suburbs. Just 200,000 of the 500,000 transactions subject to Stamp Duty in 2012-13 were in London and the South East. Family homes around the country are subject to punitive rates.
Imagine you bought a house in the West Midlands for £300,000 at the start of 2007. Not a mansion but just a normal family home in a nice neighbourhood like the one picture below.
You will have paid £9,000 in Stamp Duty on top of the price of the house. That is probably the largest cheque you will ever write to the tax man.
The latest Nationwide data shows that house prices in the region have fallen by 7.59 per cent since then, making your house now worth around £277,000. That means you might well have already lost nearly £23,000, even ignoring the Stamp Duty you paid.
Then imagine you needed to move, perhaps because you were offered a new job in another city. So you sell your house for £277,000 and use the money to buy one for the same price elsewhere. But in reality you will only have £269,000 to buy your new place because the government will demand around £8,000 for Stamp Duty on that one too.
So your initial outlay of £309,000 has shrunk to £269,000, once a total Stamp Duty bill of £17,000 and a loss in value of £23,000 have been accounted for. You’ve lost £40,000.
Just last year, 7,904 people paid Stamp Duty at 3 per cent or above in the West Midlands and another 6,020 in the East Midlands. About ten per cent of property transactions in the Midlands and the North are subject to the punitive rates and – of course – even if you don’t pay the 3 per cent rate, £2,000 on a £200,000 home is still a lot of money.
The idea that Stamp Duty is not an issue outside of London and the South East is now just wrong. The first party to realise that could enjoy an important political windfall.