The temporary increase in the threshold has meant that 95% of first-time buyers over the period have not had to pay stamp duty. An estimated 150,000 first-time buyers have benefitted from the increase in the threshold over the past two years with approximately 380,000 first-time buyers paying no stamp duty.
Returning the starting threshold to £125,000 will result in nearly 45% of first-time buyers paying stamp duty.
Regional Differences
The South East and Greater London have benefitted most from the change with around seven in ten first-time buyers having to pay no stamp duty directly due to the raising of the threshold from £125,000 to £250,000.
The North and Northern Ireland have benefitted the least with only one in six first-time buyers exempt from the tax as a result of the increase.
Only 4% of first-time buyers in Greater London will be exempt from stamp duty when the starting threshold returns to £125,000. Four in five first-time buyers in the South East will pay the tax.
The proportions of first-time buyers paying stamp duty will be much lower in other parts of the country with less than one in five paying the tax in the North and Northern Ireland.
Martin Ellis, Halifax housing economist, commented:
"The stamp duty holiday has directly helped four in ten first-time buyers over the past two years. Regionally, the impact has varied considerably with around seven in ten first-time buyers in London and the South East exempt from the tax as a direct result of the temporary change. Returning the threshold to £125,000 will hit those buying their first home in these parts of the country most.
"The doubling in the starting threshold has been a significant benefit to those who have benefitted during a time of economic and financial difficulty for many. A first-time buyer making a purchase of £200,000 will see their buying costs increase by £2,000."
OTHER KEY FACTS
- Higher stamp duty thresholds unchanged since their introduction in July 1997
If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 - when the £250,000 and £500,000 stamp duty thresholds were introduced - they would now stand at £584,000 and £1,169,000 respectively.
- More than one in four FTB purchases in London have still been liable to stamp duty
Whilst areas outside London and the South East have benefitted most from the stamp duty holiday, more than a quarter (27%) of first-time buyers purchases in the capital and 6% of first-time buyer purchases in the South East have still had to pay stamp duty.
- Whilst nearly all FTB purchases outside London and the South East have been exempt
In contrast, over 95% of first-time buyer purchases have been below the temporary starting threshold of £250,000 in all regions outside Greater London and the South East. These differences are explained by the much higher percentage of first-time buyer purchases above £250,000 in London and the South East.
- Significant rise in residential stamp duty revenue over the past decade
There was a more than threefold increase in revenue from £2.15bn in 2000-01 to a peak of £6.68bn in 2007-08. Revenue has since fallen to £4.04bn in 2010-11.
- Higher stamp duty bands generate almost 90% of revenue
Residential stamp duty revenue raised at the higher stamp duty bands (i.e. above £250,000) accounted for 87% (£3.5bn) of all residential stamp duty revenue in 2010-11. Five years earlier in 2005-06, the higher stamp duty bands contributed 74%.
