Nearly 20% of homebuyers are paying at least £7,500 in stamp duty, compared to just 6% in 2001, according to research by HBOS, who own Halifax Bank of Scotland.
The current tax levels, introduced by New Labour in 1997, is charged at 1% on people buying property worth between £125,000 and £250,000, and 3% on properties valued between £250,000 and £500,000. Property worth over £500,000 incurs a charge of 4%.
Research there estimates that 279,408 home sales qualified for the 3% tax band last year, a leap from 73,403 in 2001, bringing in as much as £4.6bn in revenue, more than double the £2.1bn generated by the tax five years previously.
In his Budget two years ago Gordon Brown lifted the threshold of stamp duty from £60,000 to £120,000, and then to £125,000 last year, but many say this change doesn’t reflect the rapid increase in house prices which has taken place taking into account the entire market.
HBOS wants increases in all bands of stamp duty to take into account these sharp increases in house prices: ‘Bracket creep has been a key factor as a growing percentage of property sales now occur above the high stamp duty thresholds of £250,000 and £500,000 which have not been changed since their introduction in 1997,’ said Tim Crawford, group economist at Halifax.
Since 1997 house prices have risen by an average 175% with almost everybody now purchasing property having to pay the tax . According to the group, if stamp duty thresholds were matched with this figure, a new £680,000 would replace the current £250,000 marker, and the highest rate of stamp duty would stand at £1,360,000.
It remains to be seen whether Mr Brown will take such research into account when he announces his 2007 Budget in the House of Commons tomorrow.