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Stamp duty reform – Scotland’s done it, can Westminster follow?

The Scottish parliament recently passed a bill reforming stamp duty so now the average Scottish homebuyer does not have to pay. Paula Higgins discusses what can be done in England to lighten the load for first time-buyers. First published by Mortgage Solutions.

The way stamp duty is structured is insane and it’s simply killing the housing market at a time when the government claims helping people buy their own home is a priority. It is UK’s fastest rising tax. Since 1995 the average amount of stamp duty paid has risen by 6.5 times more than average earnings and 4.6 times more than average house prices. See graph

The time has come for a radical reform and we have made 8 recommendations to government. Scotland has already acted by turning stamp duty into progressive tax and by setting the thresholds so the average Scottish homebuyer does not have to pay.

But how about letting the seller pay and not the buyer?

This would immediately take first-time buyers out of the equation because they have nothing to sell.  The vendor would most likely add the cost of the stamp duty to the price of the house and the buyer could add a few thousand on to the mortgage to spread the cost.

Of course, sellers might argue that they have already paid stamp duty when they bought – why should they pay twice? True enough, but they won’t be paying duty on the next place they buy up the chain, so it evens itself out.

Thresholds should be raised annually in line with house prices to stop the absurd situation where ordinary people are captured by higher and higher bands. The majority of homebuyers who pay stamp duty pay 3%, not 1%.

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