Research reveals stamp duty divide for those buying a family home

Buyers in the South of the UK pay £4,307 more on average in stamp duty on an average priced family house compared to those in the North, according to new research.

While it is expected that buyers will pay more in London where house prices are so much more expensive, the analysis of 80 major towns and cities by online estate agents HouseSimple confirms that there is a North/South divide.

On a basic family home in the South the average stamp duty tax is £5,297, some 21.7% of the average annual salary across these towns. This compares with an average stamp duty cost of just £990 on a house in the North which is only 4.5% of the average annual salary across these towns.

The disparity widens to almost £10,000 for the most expensive 10% of towns in the South, in terms of property prices, and compare with the cheapest 10% in the North. Stamp duty costs in the south rise to £9,710 compared to just £3.40 in the north, where an average priced house falls within the 0% stamp duty bracket.

Also, in a fifth of all UK towns and cities, a buyer would have to pay stamp duty equating to at least 20% of the average annual salary, to be able to purchase even an average priced family home, which they are likely to grow out of if they have more children.

To buy a ‘forever’ home, somewhere a family could live for 30 years, HouseSimple has worked out that the stamp duty bill in a third of UK towns and cities would be at least 50% of the average local salary.

The most expensive place for stamp duty tax on a family home as a proportion of average annual salary is London where the average price is £728,089 with stamp duty of £26,404 and an average salary of £29,799 making the tax 88.6% of salary.

Next is Oxford where stamp duty is 48.1% of the average salary for the average priced home at £476,918, followed by Brighton where it is 47%, Guildford at 44%, Watford at 40.6%, Bath at 40.1% and Cambridge at 38.2%.

The research shows that there are 14 towns and cities in the UK where buyers won’t pay any stamp duty on an average-priced family house, all in the North of England in locations where the average house price ranges from £100,094 to £124,653.

These locations are Barnsley, Blackpool, Bradford, Chesterfield, Doncaster, Grimsby, Hartlepool, Hull, Mansfield, Middlesbrough, Rochdale, Stockton on Tees, Stoke on Trent and Wigan.

Buying a forever home in London would mean an average stamp duty bill of £65,006, more than three times the average London annual wage. In Guildford at £44,088, Slough at £30,416, Oxford at £30,998, Watford at £31,784 and Edinburgh at £27,263, the stamp duty payable would be more than twice the average local salary.

‘The stamp duty trap is particularly severe in the South of the UK where property prices have raced away from average local salaries. Families are already having to dip into savings to meet rising living costs, the last thing they need right now is to decimate their savings, which have already been taxed, to pay stamp duty,’ said Alex Gosling, chief executive officer of HouseSimple.

‘As it is, most families could probably only stretch their finances to an average house, which they could well grow out of in a few years if they have more children. With stamp duty on a forever home out of reach for all but the wealthiest families, that leaves the majority faced with a choice. Either they make do, or face the prospect of another massive stamp duty bill a few years down the line, when they need to move again,’ he added.

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