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Stamp duty applies regional penalties

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by Gill Montia

mform.co.uk, the online mortgage broker, is arguing that those buying homes in the south and east of England are being heavily penalised by the cost of stamp duty.

According to the website, homebuyers in London, the South East, South West and East of the country paid an average of £6,280 in stamp duty during 2006/07, representing one quarter of their annual salaries.

However, in the Midlands, the North of England and Scotland, the average bill stood at £1,994. In the North of England this equates to 10% of the average wage.

The stamp duty total for 2006/07 rose by 31% on the previous year for those in the South, whereas in the North it increased by 21%.

Prior to 1997, the average first-time buyer paid no stamp duty whereas first-time buyers now pay an average of £1,600.

mform believes that the research clearly illustrates the need for a rise in the tax threshold, which currently stands at 1% of the sale price of properties worth between £125,000 and £250,000; 3% on homes between £250,000 and £500,000; and 4% on those worth more than £500,000.

The issue has recently been politicised by the leader of the Conservative Party, David Cameron, who in the event of an election victory has pledged to abolish stamp duty for all homes worth up to £250,000.

Such a move would mean that nine out of ten first-time buyers would be exempt.

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News posted: January 2, 2008

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