New analysis of home buyer enquiries across England in H1 reveals a stark North-South divide in stamp duty costs - with fewer than one in ten first-time buyers paying across Northern England, compared to 51% in the South East and nearly eight in ten in London.
Zoopla says stamp duty "now operates as two entirely different taxes depending on where you buy across the country and whether you are a first-time buyer or an existing homeowner buying your next home".
First-time buyers get relief from stamp duty and pay nothing up to £300,000. Three in eight first-time buyers (38%) pay stamp duty nationally - but six in ten pay nothing at all.
In the North East, just 2.1% of first-time buyers face a stamp duty bill. In Yorkshire and the Humber the figure is 3.8%, and in the North West and West Midlands, 6.2% and 9.3% respectively. In each case, the majority of first-time buyers are buying at prices that sit comfortably below the £300,000 threshold where relief ends.
The South East and East of England sit at the tipping point with 51% and 52% of first-time buyers in those regions paying stamp duty. In these areas the average price of a home where stamp duty is paid is £395,000 and £390,000 respectively. In London, nearly eight in ten (79.7%) pay stamp duty where the average first-time buyer price is £475,000. The average stamp duty bill is £8,750.
Home movers: stamp duty an inevitability
For existing home owners buying their next property there is no relief from stamp duty like that available for first-time buyers. This means more than four in five homeowners pay stamp duty in every English region bar the North East, where nearly two thirds (63.5%) face a bill.
In the North, bills are modest - averaging £2,200 in both Yorkshire and the North West, where home movers pay less than one penny in every pound of their purchase price as stamp duty.
Across Southern England the burden rises sharply and can have a big impact on the cost of moving home and whether people can afford to move at all. 95% of South East home movers pay stamp duty at an average cost of £11,250. In London, where the median home mover asking price is £600,000, the bill reaches £20,000.
Home movers are an important part of the housing market accounting for six in every ten property purchases. When moving costs climb to five figures in Southern England, some of those moves do not happen - reducing demand for larger homes and also reducing the supply of starter homes available to first-time buyers.
The growing cost of stamp duty for home buyers has been compounded by stamp duty price bands not keeping pace with house prices - akin to 'fiscal drag' that boosts the cost of stamp duty tax over time. The current £250,000 threshold where the 5% stamp duty rate starts for home movers was introduced over 11 years ago in 2014. If this was adjusted in line with house prices it would be around £380,000 today, saving the average home buyer up to £6,500 in stamp duty for purchases between £250,000 and £380,000.
Richard Donnell, executive director at Zoopla, commented: "Where you're buying determines what you pay in stamp duty if you're a first-time buyer. In the North and Midlands, the £300,000 takes nine in ten first-time buyers out of paying anything extra to buy their home. In London and the South East, the cost of buying an average first time buyer homes is above £300,000 for many buyers which means the majority of first-time buyers face a stamp duty bill on top of an often sizable deposit.
"For home movers, stamp duty is a near-certain cost wherever you live - and in Southern England it runs to five figures. Six in ten property purchases are made by existing homeowners. When the cost of moving becomes a meaningful friction, some of those moves don't happen, especially with lower levels of house price inflation in recent years across southern England."
