Stamp duty holiday falls well short of government forecasts
20th Nov 2009
- Stamp duty relief for buyers falls £428 million short of government forecast
- Only 115,000 home buyers benefit from the stamp duty holiday in first year
- Government stamp duty tax revenues down over 70% compared to 2006/07
- Stamp duty holiday has little impact in London but Basildon tops saver list
The stamp duty holiday implemented last September, at the height of the property downturn, has helped only 115,447 UK home buyers in its first year - less than a quarter of the number predicted by the government to benefit, according to leading property website Zoopla.co.uk.
Between 2 September 2008 (when the holiday took effect) and 1 September 2009, the tax relief saved property buyers only £173 million, compared to the £600 million forecast by the government. The extension of the holiday to the end of 2009 will also provide only limited relief with an additional 37,500 buyers expected to benefit in the last four months of 2009, saving a further £61 million.
And whilst the impact of the tax holiday to buyers has been far lower than expected, the Treasury has been hit hard by the record low property transaction levels, barely scraping in £2 billion from stamp duty in the 2009/10 tax year compared to almost £6.5 billion in 2006/07.
Property buyers in London have benefited least from the stamp duty holiday, where typical house values (£374,284) are almost double the national average. Only 13% of transactions in the capital were eligible for the tax relief (£125,000-£175,000 price bracket) between September 2008 and September 2009, far lower than any other region, and saving buyers just £9.4 million. But certain areas within commuting distance of London still offer the opportunity to take advantage of the stamp duty holiday before it expires at the end of the year. Basildon tops the list of places where buyers have benefited over the past year with 58% of purchases in the stamp-free price bracket.
Nick Leeming, Commercial Director, Zoopla.co.uk, said: "The stamp duty holiday has so far failed to reinvigorate the housing market in the way that the government predicted, with limited relief for first-time buyers particularly in the South East. With the government's plummeting stamp duty revenues, the golden goose of stamp duty now seems somewhat of a dead duck. Rather than ending the stamp duty holiday, the government should seriously consider extending it by making first time buyers permanently exempt and by giving others the ability to defer payment for up to say five years."
Top 5 areas where buyers have benefited from stamp duty holiday
| Area | Average property value (Nov 09)* |
% of sales benefiting from stamp duty holiday (Sep 08 - Sep 09) |
|---|---|---|
| Basildon (SS14) | £132,022 | 58.4% |
| Dagenham (RM9) | £158,030 | 57.4% |
| Street (BA16) | £183,702 | 55.7% |
| Milton Keynes (MK9) | £147,139 | 55.1% |
| Luton (LU4) | £142,751 | 53.8% |
* Source: Zoopla.co.uk
Stamp duty holiday beneficiaries by region
| Region | Average property value (Nov 09)* |
% of sales benefiting from stamp duty holiday (Sep 08 - Sep 09) |
|---|---|---|
| South West | £209,332 | 30.7% |
| East of England | £218,616 | 28.9% |
| West Midlands | £169,140 | 27.0% |
| East Midlands | £156,526 | 26.4% |
| Wales | £149,413 | 24.8% |
| Yorkshire and The Humber | £139,888 | 24.5% |
| South East | £258,647 | 24.4% |
| North West | £152,356 | 23.5% |
| North East | £153,834 | 21.4% |
| Scotland | £157,070 | 19.6% |
| London | £374,284 | 12.8% |
* Source: Zoopla.co.uk
- Ends -
For further information, please contact Tim Vooght at pr@zoopla.co.uk or on 020 3872 5615.
Notes to editors
About the stamp duty holiday
The stamp duty holiday came into effect on 2 September 2008, temporarily making house purchases between £125,000 and £175,000 exempt from the lowest stamp duty tax rate of 1% (the previous starting level for the tax was £125,000). Properties purchased between £175,000 and £250,000 must pay 1% stamp tax, while 3% is applied to homes costing between £250,000 and £500,000. The higher stamp tax rate of 4% is charged on purchases over £500,000.
The average saving made by those buyers able to take advantage of the stamp duty holiday is £1,498 nationally . virtually the mid-point of the £125,000-£175,000 price bracket.
About Zoopla.co.uk
Zoopla.co.uk is a unique property website offering users information and tools to help them make better-informed property decisions. Our aim is to provide the most comprehensive source of residential property market information in the UK to help buyers, sellers, owners and estate agents alike and give them an advantage in the property market.
In 2007, following the success of bringing DVD rental to the web with LOVEFiLM.com, Zoopla founders Alex Chesterman and Simon Kain realised that the UK property market had yet to fully enjoy the benefits of the internet in terms of its ability to deliver transparency and efficiency. They set out with the mission to transform the property market for both professionals and consumers by:
- offering users FREE access to instant value estimates, sold house prices and local information and trends
- enhancing estate agents' marketing efficiency by providing exposure/leads on a pay-for-performance basis
- helping users find local agents and other property professionals to assist them in the transaction process
- letting buyers make offers on ANY UK home and owners test interest in their homes before choosing to sell
- creating an environment where anyone can ask/answer questions and share their knowledge about homes
By providing FREE value estimates for EVERY UK home, sold prices and local information as well as hundreds of thousands of property listings for sale/to rent, Zoopla.co.uk is fast-becoming the ultimate destination for users to both search for property and to do their market research. We continue to be the UK's fastest growing property website and largest and most active property community, with over a million user contributions to our website in the past 12 months alone. We also offer unique features, like TemptMe. and AskMe., which allow consumers to gain an insight into the market and discover information they won't find anywhere else. Our estate agent directory, FindAnAgent and our unique AskAnAgent feature also help guide users to local professionals directly for their expertise.
We launched our website in January 2008 and since then we've been on a non-stop path to transform the UK online property sector. Our user numbers continue to grow impressively and we have consistently been the UK's fastest growing property website for the past 18 months, now attracting over 1.5 million visits per month to our website.
In July 2009 we acquired Thinkproperty.com from the Guardian Media Group and in August 2009 we added Propertyfinder.com, one of the UK's largest property portals, which we purchased from News International.
Our value estimates are calculated using a proprietary algorithm (secret formula) that we have developed by analysing millions of data points relating to property sales and home characteristics throughout the UK. The algorithm works by comparing relationships between home prices, economic trends and property characteristics in given geographic areas. Our estimates are constantly refined, using the most recent data available and a variety of statistical methodologies, in order to provide the most current information on any home.
Zoopla Limited is a privately held company with a highly experienced and proven management team, backed by well-respected angel investors and leading venture capital firms Atlas Venture (atlasventure.com) and Octopus Ventures (octopusventures.com).