Nationwide calls for stamp duty scrutiny

Mutual asks for changes to help get Britain moving

01 December 2014

Nationwide Building Society is calling for reform of the Stamp Duty Land Tax system, asking the Treasury to provide a lifeline to ordinary buyers facing a Stamp Duty bill for the first time, as well as those at risk of tipping into a higher duty band as they move up the housing ladder into a larger home.

House prices in the UK have increased by an average of 18% (to Q3 2014) since the 1% Stamp Duty threshold was last increased in 2006. Despite these rises, the thresholds at which buyers are required to pay increasing levels of Stamp Duty have remained the same.

As a result, according to recent HMRC figures, nearly 70% of home movers now pay Stamp Duty, compared with less than 50% in the late 1990s, and leaving many ordinary homeowners, who have seen property prices rise, in danger of facing such a significant up front cost that many are put off moving altogether.

Had they kept pace with house price inflation, the minimum thresholds at which Stamp Duty is payable would have increased at 1% from £125,000 to £145,000, the 3% threshold would have risen from £250,000 to £295,000, the 4% threshold from £500,000 to £590,000 and the 5% threshold from £1,000,000 to £1,180,000.

Current Stamp Duty Thresholds

Current Stamp Duty Thresholds
Value Rate
Below £125,000 0%
£125,001 to £250,000 1%
£250,001 to £500,000 3%
£500,001 to £1,000,000 4%
£1,000,001 to £2,000,000 5%
£2,000,001 and above 7%

In a letter to George Osborne, ahead of his Autumn Statement in December, Nationwide has urged the Chancellor to consider reforms to Stamp Duty including raising thresholds to better reflect house price inflation and to stimulate market activity.

Nationwide’s Chief Executive, Graham Beale comments; “Stamp Duty now impacts tens of thousands of people every year, incurring a bill of almost £2,000 for those buying a home at the UK average price of £190,000, with the cost increasing threefold for properties costing more than £250,000. Our own figures demonstrate the distortion that the current slab thresholds create and highlight the fact that a sale price even £1 over each threshold can result in a hugely inflated bill. This additional cost may even be discouraging some from moving altogether.

“That’s why I have called on the Chancellor to review the current system. We need Stamp Duty thresholds increased to better reflect rising house prices, as well as the introduction of an escalator so that those thresholds continue to adjust automatically in the future. This would make Stamp Duty clearer and fairer for everyone.”

When considering that more than half of revenue now comes from purchases over £500,000, according to the Office of Budget Responsibility, such reform would not necessarily create a significant impact on the revenue the tax generates. In fact, keeping Stamp Duty unchanged could even be considered a contradictory situation when compared with the financial assistance the government is providing through Help to Buy.

Infographic illustrating purchase price band

Infographic illustrating purchase price band

Housing transactions by price band and impact of the ‘slab’ structure (England and Wales)

About Nationwide Building Society

Nationwide is the world's largest building society as well as the second largest savings and mortgage provider in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 17,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 17,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.