Coventry Building Society issues tax warning as millions pay £5,000 surcharge

VaselineJuly 21, 2024

0 2 minutes read

Coventry Building Society issues tax warning as millions pay £5,000 surcharge

Coventry Building Society is urging stamp duty to be on the books before the next Budget as the average homebuyer will be hit with an extra £5,000.

With Labor back in power, the building society is reminding Prime Minister Keir Starmer to tackle the issue before tax thresholds are changed.

In 2024, UK home buyers will pay £5.4 billion in stamp duty, which is around the same amount paid last year.

Property buyers currently pay the levy if their homes cost more than £250,000, but this threshold will drop to £125,000.

This will take the average house tax in England from £2,619 to £5,119.

First-time buyers currently pay stamp duty if their home costs more than £425,000, which will drop to £300,000 in March 2025.

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Building society raises alarm over pending tax changes

ALAMY

Stamp duty is a fee that Britons occasionally charge when buying residential property or land in England that exceeds £250,000.

However, the rate at which they are taxed is different if they are a first-time buyer as they qualify for the exemption.

From next year, the rates and exemptions available to home owners and first-time buyers will be different.

As a consequence, more people are expected to be forced to pay stamp duty if action is not taken.

Jonathan Stinton, head of mortgage relations at Coventry Building Society, called on the new Labor government to take action as soon as possible to help buyers.

He explained: “The new government has been pretty tight-lipped about stamp duty so far, but silence is certainly not golden when it could end up costing homebuyers thousands of pounds in extra charges.

“If we don’t hear anything between now and next April, those looking to buy a mid-priced home will have to pay an extra £2,500.”

This increased tax bill comes as 1.5 million homeowners are expected to exit the fixed rate deal by the end of the year as interest rates remain relatively high.

According to Stinton, the new government’s next budget could be announced as soon as September, with just eight months to go until the temporary property tax thresholds are halved to just £125,000.

Once this is implemented, most new home buyers could be hit with higher upfront fees.

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Stamp duty was considered a “barrier” tax.GETTY

The mortgage expert shared a prediction about how the housing market is likely to play out in the coming months, which could further fuel the need for reform.

“Over the next few months, buyers will be increasingly likely to rush through purchases to avoid a significant tax increase, causing a flurry of activity followed by a sharp decline after the discount ends.

“This swell and burst effect will not help build long-term stability in the market, so stamp duty should be high on the chancellor’s list of priorities when preparing for the next Budget.”

Chancellor Rachel Reeves has not yet set a date for this year’s next Autumn Budget.

VaselineJuly 21, 2024
0 2 minutes read

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