Coventry Building Society calls for stamp duty reform as homebuyers hit ‘barrier’ tax.

Currently, property buyers must pay stamp duty if their home costs more than £250,000.

However, this threshold will drop to £125,000, taking the tax on the average priced house from £3,386 to £4,886.

This will come into effect from March 2025, as well as other changes that will affect first-time ladder movers.

Currently, first-time home buyers pay the levy if their property costs more than £425.00, but this will drop to £300,000.

Following last week’s inflation figures, Coventry Building Society notes that this could lead to a wave of new home buyers buying into the market.

The consumer price index (CPI) rate fell to 2.3% for the 12 months to April 2024, according to figures from the Office for National Statistics (ONS).

Interest rates have been raised by the Bank of England due to historically high inflation, with the base rate at 5.25%.

This pushed mortgage rates up, causing homeowners to pay more in repayments.

Furthermore, this has put many off trying to get on the property ladder, but Coventry believes this could change.

Jonathan Stinton, Head of Mortgage Relations at the building society, said: “The prospect of base rate cuts could prompt more potential buyers to consider moving, but the upfront tax bill could still be a huge barrier they struggle to overcome bypass it.

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“Paying thousands of pounds in stamp duty could easily put off any potential buyer and prevent people from getting on and off the ladder as freely as they would like.

“It could cause a prolonged downturn in the market, which then prompts drastic measures to get it moving again, leading to another boom/bust cycle – as we saw with the 2020 stamp holiday.

“Previous stamp duty changes have not stood the test of time – they were quick fixes that only helped buyers in the short term.

“Now is the time for carefully considered reform, taking into account some of the issues facing buyers and sellers, with the aim of building long-term stability rather than a sudden surge in numbers.”