Afternoon:
14°c
Londoners are being 'milked' by unfair house tax
Jonathan Prynn, Consumer Affairs Editor10.10.07
The Chancellor is reaping more in stamp duty from homes bought in three London boroughs than from Scotland, Wales and Northern Ireland combined.
House-buyers in Kensington & Chelsea, Westminster and Wandsworth contributed £550 million to Treasury coffers last year.
This compared with £495million from the three countries, which have a combined population of almost 10 million.
Borough-by-borough figures, never previously published, show the tax paid on home purchases in London averaged almost £8,000 last year.
Stamp duty was highest in Kensington and Chelsea with an average of £34,886, followed by Westminster with £22,329, Camden (£16,024) and Richmond (£13,671).
The figures, which were compiled from HM Revenue and Customs data by website propertyfinder.com, also show how stamp duty has become almost unavoidable in the capital.
Last year, only 1.2 per cent of homes bought in London were below the £125,000 threshold. Just over 20 per cent were in the one per cent band (valued at between £125,000 and £250,000), 47.5 per cent in the three per cent band (£250,000 to £500,000) and
30.8 per cent in the top four per cent band (more than £500,000).
Warren Bright, chief executive of propertyfinder.com, said: "With just a handful of boroughs contributing more in stamp duty than vast swathes of the UK put together, the Treasury is milking London's housing market for all it can. The banding effect of stamp duty only makes the situation worse."
Shadow chancellor George Osborne has promised to help young first-time buyers by doubling the threshold for stamp duty from £125,000 to £250,000.
However, there would be few beneficiaries in London, where the average price is £280,000.
Tony Arbour, Conservative housing and planning spokesman on the London Assembly, said stamp duty had become "an absolute milch cow" for the Government.
"It is a stealth tax borne unfairly by London. Perhaps it is time to look at a higher stamp duty exemption in the capital than for the rest of England."
Londoners paid £1.725billion in stamp duty last year. The top five boroughs contributed £723 million, compared with around £675 million from the whole of the UK in 1997.
Reader views (6)
The way in which stamp duty is calculated is ridiculous. How about having bands which are linked geographically to average house prices and a progressive scale which works like income tax, so you don't suddenly go from paying 1% of the total to 3% of the total just because the house you're buying costs the wrong side of £250,000. That would go some way to making the system fairer.
People in London are not necessarily richer just because our houses cost more. In most cases, we’re simply just much more in debt to the bank.
- Marc, Richmond
Why is Wandsworth included?
Don't they pay very low council tax compared with Westminster, Kensington and Chelsea? All relative.
- Claire Elizabeth, London
I live in K&C and I'd like to move home, but it's going to cost me £32K in stamp duty to do so, (that's a 20% surchage just for a few more square feet) which means I won't!
- Ollie, London
If you abolished Stamp Duty it wouldn't make houses cheaper: it would just lead to a further hike in prices. Economics 101.
- Tonyb, Twickenham
I'm crying for the poor homeowners forced to live in very expensive properties in Chelsea etc. Swings and roundabouts...they also enjoy the asset.
- Betty Clarke, Reading
Tell me about it. I just forked out £28,000 to Golden Gordon for the privilege of selling my house. This tax is even more of a rip-off than Inheritance Tax.
- Nobby Clark, London
