Homebuyers in the south 'pay three times more stamp duty than those in the north'

People buying a property in the South of the UK paid an average of £6,280 in stamp duty during 2006/07, while those in the North paid just £1,994 during the same period, according to online mortgage firm mform.co.uk.

The group, which analysed Treasury data, said people in the South also saw a bigger increase in the amount of the tax they were liable for, with it soaring by 31 per cent during the 12 months to the end of March.

But those in the North paid only 21 per cent more in the tax than they had during the previous 12 months.

It added that the amount of stamp duty people in the South, which is made up of London, the South East, South West and the East, now paid was equivalent to around 25 per cent of average annual earnings.

In the North, which includes all other regions of the UK, it was only around 10 per cent of average pay.

Stamp duty is currently charged at 1 per cent of the sale price of properties worth between £125,000 and £250,000, rising to 3 per cent on homes worth between £250,000 and £500,000, with the tax charged at 4 per cent on those worth more than £500,000.

The higher cost of stamp duty in the South is likely to reflect not just the higher cost of homes there, but also the fact that more properties fall into the 3 per cent and 5 per cent bands.

Mform.co.uk said that, as the burden of stamp duty rose, increasing numbers of people were likely to add the cost to their mortgages, with 28 per cent of homebuyers doing this during the past three years, increasing their mortgages by an average of £3,771.

Francis Ghiloni, marketing and business development director at mform.co.uk, said: "Stamp duty adds significantly to the cost of moving home and the housing market boom has meant more and more people are paying stamp duty.

"Our analysis shows there is a massive North-South divide, with average homebuyers in the South paying three times more than their counterparts in the North of the country.

"However, no matter where you are buying, stamp duty has a major effect on your finances and it is no surprise many people are adding the cost of stamp duty to their mortgage.

"Many homebuyers will probably take what seems like the easy option without thinking through the long-term costs."

Unsurprisingly people in London pay the most stamp duty at an average of £7,942, while those in the North East pay the least at just £1,319.

People in Northern Ireland saw the biggest jump in the amount of the tax they were liable for, with it more than doubling during the 12 months to the end of March to £2,310 as the housing boom in the region pushed more homes into higher stamp duty bands.