The latest property market analysis by London lettings and estate agent, Benham and Reeves, has revealed that in the last 25 years, the cost of stamp duty has increased by 490% for the average homebuyer.
Now that the stamp duty holiday is done and dusted, the average homebuyer in England will once again pay the government for the pleasure of purchasing their own home, a bill of £3,548 on the current average house price to be exact.
Thanks to a house price boom spurred by the stamp duty holiday itself, that’s a tax bill some 44% higher than the average stamp duty paid prior to its introduction.
In fact, in the last 25 years, the cost of stamp duty has never been higher, despite the effective rate being paid falling below one percent when the old ‘slab’ structure was abolished in December 2014 and replaced by the new ‘slice’ system.
When removing both unique instances of the recent SDLT holiday and the reprieve granted in 2009 in the wake of the financial crisis, the average cost of stamp duty has increased by an average of 8.4% every year since 1997.
In fact, other than the two occasions where stamp duty was paused and reduced, the tax bill paid by homebuyers has only seen a year-on-year decline on four other occasions.
The first three of these came prior to, and following, the initial stamp duty break in 2009 as house prices continued to decline following the financial crisis.
The other materialised in 2015 following the switch from a ‘slab structure’ to a ‘slice’ structure whereby a property paid a percentage of stamp duty at each value threshold, rather than a full percentage based on the single threshold at which is sat.
The cost of £3,548 now faced by the average homebuyer is also a whopping 490% more than the £601 paid back in 1997.
Director of Benham and Reeves, Marc von Grundherr, commented:
“With the latest generation of homebuyers enjoying a taste of stamp duty free property purchases there are renewed calls for its complete abolition but, as always, these will continue to go unheard.
Over the last 25 years, the government has become very good at fuelling buyer demand while failing to address the housing crisis and building more homes. This has worked very nicely for them where an increased cost in stamp duty is concerned and their free slice of the pie, cut from the savings of struggling homebuyers, has continued to climb with absolutely no justification whatsoever.”
Table shows how the rate of stamp duty paid by homebuyers in England has changed over the last 25
years
Year
SDLT type
AveHP – England (July)
SDLT cost
SDLT effective rate
SDLT cost change
1997
Slab Structure
£60,089
£601
1%
N/A
1998
Slab Structure
£65,475
£655
1%
9.0%
1999
Slab Structure
£70,612
£706
1%
7.8%
2000
Slab Structure
£82,563
£826
1%
16.9%
2001
Slab Structure
£91,430
£914
1%
10.7%
2002
Slab Structure
£110,001
£1,100
1%
20.3%
2003
Slab Structure
£132,318
£1,323
1%
20.3%
2004
Slab Structure
£156,730
£1,567
1%
18.4%
2005
Slab Structure
£165,756
£1,658
1%
5.8%
2006
Slab Structure
£176,164
£1,762
1%
6.3%
2007
Slab Structure
£193,360
£1,934
1%
9.8%
2008
Slab Structure
£185,844
£1,858
1%
-3.9%
2009
Stamp Duty Holiday
£167,673
£0
0%
N/A
2010
Slab Structure
£180,519
£1,805
1%
-2.87%
2011
Slab Structure
£177,164
£1,772
1%
-1.9%
2012
Slab Structure
£179,756
£1,798
1%
1.5%
2013
Slab Structure
£184,274
£1,843
1%
2.5%
2014
Slab Structure
£200,825
£2,008
1%
9.0%
2015
Slice Structure
£213,518
£1,770
0.83%
-11.8%
2016
Slice Structure
£230,868
£2,117
0.92%
19.6%
2017
Slice Structure
£241,406
£2,328
0.96%
10.0%
2018
Slice Structure
£247,981
£2,460
0.99%
5.6%
2019
Slice Structure
£248,468
£2,469
0.99%
0.4%
2020
Initial Stamp Duty Holiday
£253,226
£0
0%
N/A
2021
Reduced Stamp Duty Holiday Threshold
£270,973
£1,048
0.39%
N/A
2021
Slice Structure
£270,973
£3,548
1.31%
43.7%
Median Rate of Annual Stamp Duty Tax Growth – 1997 to 2021
8.40%
House price data sourced from the Gov.uk UK House Price Index based on a July annual change as the latest
month available
Historic stamp duty rates sourced from stampdutyrates.co.uk and applied to the respective average house
price in each year
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About the Author
Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 19 prominently located branches and 11 international offices.