Stamp duty dilemma results in 14,000 homes being sold at a loss

 
Sold: homeowners are being forced to sell their properties at a loss
Chris Ison/PA Wire
3 December 2013

Research today revealed how the “Stamp Duty Dilemma” forced 14,000 UK homeowners to sell properties at a huge loss last year.

The study also shows current stamp duty rates left a further 10,000 homeowners unable to sell their property at all.

The organisation behind the research says the stamp duty threshold, which hits buyers with a £7,500 tax bill when purchasing a home over £250,000, is massively outdated and should be reformed.

One Conservative backbencher branded stamp duty “vindictive” and called for it to be scrapped on homes up to £500,000. It comes days before Chancellor George Osborne makes his Autumn Statement, with property taxes likely to play a central role.

The research concludes that rising prices mean 73 per cent of all properties on the market now sit just under the £250,000 threshold — 50,000 more homes will reach it in the next five years. Naomi Heaton, chief executive of London firm LCP which commissioned the study, said: “When they decide to sell, they will be faced with a very tough decision, the Stamp Duty Dilemma — to sell at up to a £10,000 discount? Or not to sell at all?

“The first course of action means the homeowner may be treading water when they buy a new property as they are unable to trade up. The second course of action is inaction. Either way, the doors remain firmly closed to first time buyers.”

Under current rules people purchasing a property between £125,000 and £250,000 pay one per cent stamp duty.

When the price exceeds the £250,000 threshold by a penny the rate jumps to three per cent — forcing the buyer to pay an extra £5,000 in tax.

It means few are willing to buy homes priced over £250,000. A property’s value must reach closer to £300,000 before it escapes the trap.

The LCP research found 13,866 homeowners were forced to sell at a discount of some £10,000 last year, a further 9,721 were simply unable to get a sale.

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