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Last Updated: Monday, 14 March, 2005, 09:36 GMT
Stamp duty rumours gathering pace
House hunters
Fewer than 100,000 houses sold for less than 60,000 in 2004
Speculation is growing that Chancellor Gordon Brown will raise the stamp duty threshold in Wednesday's Budget.

Newspaper reports have claimed that the threshold will be raised from 60,000 to 100,000, in a bid to ease the burden on first time buyers.

A survey by Alliance & Leicester bank has shown that just 99,000 houses sold for less than 60,000 in 2004.

In parts of the UK, it is nearly impossible for first time buyers to escape stamp duty, the bank said.

House price inflation

With first time buyer activity at a 20 year low, this group of people could do with a helping hand
Stephen Leonard, Alliance & Leicester

Ten years ago, buyers had a much greater chance of avoiding stamp duty, with close to half a million properties, in England and Wales alone, selling for less than 60,000.

Since then, average UK property prices have more than doubled while the starting threshold for stamp duty has not increased.

As a result, the number of properties incurring stamp duty has rocketed as has the government's tax take.

Just 8% of house sales in England and Wales escaped stamp duty in 2004.

In January, the Halifax bank said that the revenue from stamp duty on house sales had risen from 465m in 1993-4 to 4.3bn in the current tax year.

Election looming

Speculation has been growing that the Chancellor - mindful that first time buyers are at a 20 year low and with a likely general election looming - could raise the stamp duty threshold for the first time since 1993.

STAMP DUTY FOR UK HOMES
Up to 60,000 - nil
60,001 to 250,000 - 1%
250,001 to 500,000 - 3%
More than 500,000 - 4%

An increase to 100,000 would help some first time buyers, particularly outside the south east of England.

"The number of houses that are available to first time buyers under the 60,000 threshold today is severely limited," Stephen Leonard, an Alliance & Leicester spokesman, said.

"Stamp duty was never intended to be a prohibitive tax and with first time buyer activity at a 20 year low, this group of people could do with a helping hand."

Mr Leonard added that he would like to see first time buyers exempted from paying stamp duty altogether.


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