The government has been told that raising the stamp duty threshold would both trigger more house moves, and bring the tax back to ‘original’ 2014 levels.
NAEA Propertymark says that when former Chancellor George Osborne fundamentally reformed stamp duty in late 2014 the average house price was £203,346.
Under the Osborne reforms, stamp duty was paid on purchases over £125,000 which was roughly 61 per cent of the 2014 average price.
By 2019, the NAEA says, the average house price was £244,729 meaning that purchases are now paying approximately 51 per cent of the price for SDLT.
“In order to maintain the 61 per cent ratio … NAEA Propertymark believe the value for property at which SDLT is paid should be raised to £150,000. By introducing a higher starting threshold this would provide a fairer system for those purchasing at the lower end of the housing market and ensure that SDLT keeps up with average property prices” says a statement from the association.
The NAEA goes on to say that raising the threshold at which stamp duty is paid on residential properties costing over £150,000 would help all purchasers, particularly those at the lower and middle end of the market.
The statement says: “Average weekly earnings put pressure on people’s ability to pay for deposits and solicitors’ fees when they move or buy property. Through raising the threshold this would incentivise more people to buy, make it more affordable to purchase property and ensure more people keep more of their money to spend in the wider economy.”
The NAEA goes on to add that average weekly earnings in the UK have risen from £447.46 in 2014 to £504.97 in 2019 and says: “Slow rises to average weekly earnings put pressure on people’s ability to pay for deposits and solicitors’ fees when they move or buy property … By introducing a higher starting threshold this would ensure that SDLT keeps up with weekly earnings.”
The association’s statement is part of its submission to the government ahead of the 2020 Budget on March 12.