House prices rise above £250,000 stamp duty threshold
02-18-2014
Buyers face paying 3pc stamp duty as average asking prices rise to £251,964
The forecast 23.7 per cent jump in house prices would take the national average property price to £278,000 Photo: PA
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By Scott Campbell
The average asking price of a home has risen above the 1pc stamp duty threshold of £250,000, according to new figures.
Rightmove said that asking prices have risen to £251,964 on average in England and Wales, pushing them into the 3pc stamp duty bracket. While in London an 11.2pc increase means that sellers are typically looking to make £541,313 from their properties.
The figures show the biggest increase year-on-year since 2007.
Miles Shipside, director of Rightmove, said: “The shortage of properties on the market and pent up buyer demand is helping to push prices over that £250,000 level. It does mean that moving is more expensive, so as well as higher prices, more buyers are now having to pay additional stamp duty as well.”
The number of new properties listed on the site also increased by 18pc to 27,768 per month on average.
Earlier this month, EY ITEM Club warned that the Bank of England should be “prepared to take action” as they revealed that income multiples had returned to pre-crisis levels and the capital’s housing market was showing “bubble-like conditions”.
However, Mr Shipside said that he disagrees with the report and that he predicts London’s housing market will remain steady. He said: “You get a bubble when people suddenly lose confidence, and that tends to be an economic crisis, and at the moment there doesn’t appear to be anything like that on the horizon.”
Yesterday, Mark Carney, the Bank of England Governor, admitted that the Bank of England is powerless to control rapidly increasing prices of prime property in London.
The Chancellor George Osborne is being urged to amend the taxation thresholds on house purchases in next month’s Budget to avoid what experts have described as a “stamp duty crisis”.
Adam Challis, head of residential research at Jones Lang LaSalle, the world’s second-largest estate agent, said the stamp duty rules created “perversions” in the market, while research last year by property advisers LCP found the £250,000 threshold had forced thousands to sell their property at a discount.
“Immediately above and below each of the stamp duty thresholds, you get quite strong activity, and then you get a stickiness for prices just above,” said Mr Challis.
According to HMRC’s Ready Reckoner, lowering the 3pc rate to 2pc would cost the Treasury £1bn, while raising the £250,000 threshold to £300,000 would cost £750m.
Britain’s property market has been boosted by Help to Buy, which offers Government subsidies to borrowers with small deposits.
Stamp duty raised almost £7bn in the nine months since the scheme launched in April, up 30pc from the previous nine months.
However, experts said the benefits of Help to Buy were being eroded by the lack of progression between stamp duty bands.