A significant division is deepening across England regarding stamp duty payments, with new research indicating that the financial burden of the property tax falls disproportionately on buyers in the South. Data from Zoopla reveals that while almost 80% of first-time buyers in London face a stamp duty bill, this figure drops to fewer than one in ten across the North of England. This widening gap underscores the substantial regional disparities in property values across the UK.
Currently, stamp duty is levied on property purchases exceeding certain thresholds. First-time buyers benefit from an exemption on properties valued up to £300,000, while the standard residential purchase threshold is £125,000. In the recent 2024 Autumn Budget, Chancellor Rachel Reeves further increased the stamp duty surcharge for additional homes from 3% to 5%, impacting landlords and those purchasing second properties.
Richard Donnell, executive director at Zoopla, highlighted how location is now the primary determinant for first-time buyer stamp duty liability. He noted that the £300,000 exemption effectively removes nine out of ten first-time buyers in the North and Midlands from paying any stamp duty. Conversely, in London and the South East, the average cost of a first-time buyer home frequently surpasses this threshold, meaning the majority of new homeowners in these regions incur a stamp duty charge in addition to their often considerable deposit.
The research illustrates this stark contrast with specific regional figures. In the North East, only 2.1% of first-time buyers pay stamp duty. This rises slightly to 3.8% in Yorkshire and the Humber, and 6.2% and 9.3% in the North West and West Midlands respectively. However, the South East and East of England represent a tipping point, with 51% and 52% of first-time buyers in these regions, respectively, paying stamp duty, where average home prices for those paying the tax are around £395,000 and £390,000. In London, where the average first-time buyer property costs £475,000, nearly 80% (79.7%) pay an average stamp duty bill of £8,750.
For existing homeowners moving up the property ladder, the picture is even more widespread. Unlike first-time buyers, there are no stamp duty reliefs available to them. Consequently, more than four in five homeowners pay stamp duty in every English region except the North East, where approximately two-thirds (63.5%) still face a bill. While bills in the North remain modest, averaging around £2,200 in Yorkshire and the North West, they soar in the South. Over 95% of home movers in the South East pay stamp duty, with an average cost of £11,250. In London, where the median asking price for a home mover is £600,000, the average stamp duty bill reaches a substantial £20,000.
This growing disparity could further impact regional housing markets, potentially dampening mobility for existing homeowners in the South where the cost of moving, including stamp duty, represents a significant friction. Lower levels of house price inflation in Southern England in recent years, combined with high stamp duty costs, may be contributing to fewer moves, despite the continued demand for housing.
Source: Zoopla