More first-time buyers pay stamp duty

Posted: 11 Oct 2006 09:02:59 GMT

More than half of all first-time buyers in the UK now pay stamp duty.

More than half of all first-time buyers in the UK now pay stamp duty, a new report reveals.

The Council of Mortgage Lenders (CML) claims that the proportion of first-time buyers paying stamp duty has soared to 56 per cent, up from just 48 per cent a year ago.

The number of first-time buyers as a percentage of total house purchases fell last month to just 35 per cent, the lowest figure recorded by the survey since it started in April 2005. First-time buyers now spend an average of 17.1 per cent of their income on mortgage interest payments

However, the total number of first-time buyers has grown from 34,900 in August last year to 38,100 this August, while the average age of first-time buyers has remained consistent at 29 and the median first-time buyer mortgage at 90 per cent of property value.

Just 15 per cent of those moving home in August did not pay stamp duty, down significantly from 21 per cent for the same month last year.

Experts are becoming increasingly concerned about problems of affordability in the housing sector, as property price rises continue to outstrip inflation. Analysts have widely predicted that a further interest rate rise is likely before the end of the year.

CML director general, Michael Coogan, said: "For the rest of this year, we expect some moderation in activity although the market is continuing to outperform our earlier forecasts."

Commenting on the CML data, RICS spokesman, Jeremy Leaf, added: "The structure of stamp duty is antique - this tax needs to catch up with the property market and house prices… The government must raise the bottom threshold to £150,000, ensuring that those who can pay, do pay."

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