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Stamp duty costs soar

Stamp duty costs soar

Category: Money

Updated: 23/06/2014
First Published: 23/06/2014

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Moving house is expensive at any time, but with homemovers having to factor in average stamp duty payments of £11,800 over their lifetime, the costs are becoming increasingly worrying.

The estimated stamp duty bill for England and Wales has risen by £9 million in the last year to £5.6 billion, according to research from Lloyds Bank, boosted by rising house prices and the tiers of stamp duty remaining fixed.

Lloyds' research has shown that people remain in their home for an average of just under eight years and take three steps on the housing ladder in their lifetime. From this, they have estimated costs based on people joining the ladder in 1998 and then upscaling and making their second purchase in 2006 and their third move this year.

Using this example, over their lifetime homeowners in London who bought their first home in 1998 will now, on average, have paid £38,000 in stamp duty – nearly three times as much as the rest of England and Wales. The lifetime payment for the South East stands at a costly £16,500, for the South West it is £11,500 while the West Midlands are paying £10,000. Showing the stark regional differences, at the other end of the scale are people living in Wales who, over a lifetime, will pay just £3,718 in stamp duty costs – just a third of the UK average.

When buying in 1998, just 17% of people would have had to factor in stamp duty costs, but this has increased five-fold to 83% today. The average amount being paid has seen an even larger tenfold increase over 16 years from just £240 per purchase in 1998 to £2,383 today.

Marc Page, mortgages director at Lloyds Bank, said: "Stamp duty bills continue to increase each year as house prices rise. The average homemover now pays nearly £12,000 during their life as they make their way up the ladder. This just goes to show that unfortunately some dreams still come with a price tag so homeowners need to carefully consider total costs of moving."

Whether you are looking to get your first step on the property ladder, or you are moving up, it's extremely likely you will need to include stamp duty costs in your budgeting. If you are buying a property between £125,001 and £250,000 you will pay 1% of the full purchase price while if it's priced at £250,001 to £500,000 then you will have to find 3%, and the percentage continues to increase with the price tag of the property, up to 7% for properties over £2 million.

You will need to budget very carefully as moving costs can quickly mount up and need to be included in the overall amount to ensure you can afford it. It's not enough to just save that deposit, you will also need to think about mortgage arrangement fees, surveys and searches, legal costs, estate agent fees and removal costs to name just a few, but the biggest cost, over and above the deposit, is always likely to be the stamp duty and this only looks to be increasing.

So do your sums, and make sure you can afford all the costs, including any hidden ones, involved in purchasing property and you will be increasingly closer to realising that aim of owning your dream home.

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