29According to the Home Owners Alliance the average stamp duty paid on buying a home has jumped from £532 in 1995/6 to £5957 in 2011/12. In London, the average amount of stamp duty paid by homebuyers has rocketed to £17,529. Stamp duty has risen 7.1 times faster than inflation, 6.5 times faster than average earnings and 4.6 times faster than house prices since 1995/6. The average stamp duty paid is now equivalent to 11 weeks average earnings, up from 8 days average earnings in 1995/6
Government make more out of stamp duty than they will on taxes on on alcohol and tobacco by 2017/18. Someone buying a £250,000 home with a 95% mortgage will now have to give nearly 40% of the money they have to save to the government. The repeated increase in stamp duty is a major contributor to the decline of homeownership in the UK since 2002. Since 1997 – when the government decided to start hiking up the home tax – the number of stamp duty bands has increased from 1 to 5, and the highest rate of stamp duty has increased from 1% to 7%. The government has designed the system so that even small increases in house prices lead to homebuyers having to pay dramatically higher tax. Stamp duty has gone from a tax that most homebuyers don’t pay to one that most have to pay. In 1992/3, only 37% of properties were subject to stamp duty, but now 54% are.