Over a quarter of all property purchases in the UK last year incurred the higher rate of stamp duty having to pay over £7,500 in tax to the treasury.
Stamp duty was introduced in 1997 as a tax on people buying expensive houses, a very basic way of redistributing wealth. The issue is that as house prices have increased the stamp duty thresholds have not.
On average a property that cost £750,000 today would have cost £250,000 in 1997.
This stealth route to increasing tax has and is making it extremely difficult for first time buyers - not only do you need a significant deposit to secure a mortgage, you also need funds to pay solicitors fees, surveyors fees and a mortgage fee then on top of all this you need to find another £7,500 + to pay to the government for the privilege of buying your first home.
This wouldn't be such an issue if renting was cheap but it simply is not. When you compare rental prices in the UK especially those in London to other European countries and main cities you can see quite quickly why more Europeans rent for much longer periods.
What's the answer?
Apparently it is a policy called Help to Buy - quite possibly the worst idea this government has come up with.
If you take London as an example, you have a city where property prices are already out of control and out of the reach of many Londoners. You then have a government that announces to the country in April 2013 that in January 2014 we will be helping as many first time buyers as possible to buy property through a scheme that means they only need a 5% deposit - not a bad idea you think. However for the enterprising people out there all they took from this was - buy as many properties as possible between April 2013 and January 2014 as there will be great demand in January 2014 and we will have the supply. This has caused very sharp increases in London property prices over the last 6 months which show no signs of slowing.
End result = a property that would have cost £300,000 in April 2013 and required a 10% deposit of £30,000 is looking likely to cost £360,000 + in January 2014 and require a 5% deposit of £18,000 - great £12,000 less deposit, however it is £60k more expensive and is now out of our imaginary couples price range as they can only get a £270,000 mortgage.
Who in government thought that what we really need now is a second housing price bubble?
As the title states, Stamp Duty - one of the most hated taxes.