A new report from Yorkshire Building Society has revealed that during 2016 almost three quarters of first time buyers paid stamp duty - a rise of 53% compared with a decade earlier.
According to the lender, the proportion of first-time buyers able to find a home under the stamp duty threshold has almost halved in just a decade, as buyers increasingly struggle to find properties under £125,000.
The stamp duty threshold was increased to £125k in 2006 to keep pace with house price inflation. The threshold has remained the same since then, despite the fact that the average house price has risen by 35% since 2006, bringing more properties into the stamp duty threshold. To levy the tax against a similar proportion of first-time buyers who paid the tax in 2006, the government would need to increase the threshold to £175,000.
Additionally, average wages have fallen by 1% in real terms over the same period.
Yorkshire Building Society is now calling on the government to reform the tax in this year’s upcoming budget, believing that stamp duty should be made a seller's tax.
With stamp duty being paid by the property seller, first-time buyers in the UK could save an average of £3,625, while Londoners could save £13,171. Similarly, those moving up the property ladder could save an average of £4,154 across the UK, and £9,762 in London.
Andrew McPhillips, Chief Economist at Yorkshire Building Society, said: “In its present form, stamp duty does not suit today’s housing market - it pushes up costs for those looking to buy, exacerbating affordability issues in a market where prices have vastly outpaced wage growth.
Levying the charge against sellers rather than buyers will help to reduce costs for first-time buyers, helping more people to get on the property ladder. It would also help those moving up the property ladder, enabling them to move to a more suitable property and potentially freeing up smaller homes for first-time buyers to purchase.
Although this would help to alleviate some of the effects of the housing crisis, it does not address the root cause which is the lack of supply. The government should implement the proposals in their recent White Paper and go further to boost housebuilding so that there are enough."