The stamp duty bill paid on an average-priced home in England has risen by 1,260% since the current tax threshold was introduced according to new analysis from Coventry Building Society.
The lender found that while average house prices have increased by 84% since 2006, the £125,000 threshold at which buyers begin paying stamp duty has remained unchanged.
When the threshold was introduced 20 years ago, the average home in England cost around £159,000, placing it just £34,000 above the nil-rate band. Today, the average property costs approximately £291,000, leaving it more than £166,000 above the threshold.
As a result, the stamp duty bill on an average-priced property has increased from around £340 in 2006 to £4,570 today.
UNFAIR TAX
The findings reignite debate around the role of stamp duty in the housing market, particularly as affordability pressures continue to affect buyers across much of the country.
According to Coventry Building Society, buyers in several northern regions would not have paid any stamp duty on an average-priced home when the threshold was introduced. In the North West, for example, purchasing an average property now attracts a tax bill of around £1,800.
The impact is even more pronounced in London, where the stamp duty charge on an average-priced home has increased from £1,334 to more than £17,000 over the same period.
The higher tax burden continues to generate substantial revenues for the Treasury. HMRC figures show that homebuyers paid £1.1bn in stamp duty during May alone, taking total receipts for the year to date to £5.4bn.
“When the current stamp duty thresholds were introduced, Tony Blair was Prime Minister.”
Jonathan Stinton, Head of Intermediary Relationships at Coventry Building Society, says: “The question is whether a threshold designed for the housing market of 2006 still make sense for a housing market twenty years later.
“When the current stamp duty thresholds were introduced, Tony Blair was Prime Minister, the first iPhone hadn’t been released, and the average home in England cost £159,000. Today the average price is a lot different – but the starting point for the tax hasn’t moved.
“It’s not surprising that buyers are paying much larger tax bills when the threshold has been standing still while house prices have risen all around it.
“In some parts of the country buyers who wouldn’t have paid a penny in stamp duty when the thresholds were introduced are now facing bills worth thousands of pounds.”
DIFFERENT MARKET
He adds: “Governments have recognised the need to temporarily adjust stamp duty during periods of market stress, whether that was after the financial crisis or during the pandemic – but the underlying structure of the tax has barely changed.
“The housing market today looks very different to 20 years ago, and with people facing increasingly large tax bills, some serious thought should be given to how property taxes can be made fit for 2026 and beyond.”
The research is likely to add to calls for a review of the stamp duty system, particularly as transaction costs remain a significant barrier for many first-time buyers and home movers.
