Picking up the bill: The huge stamp duty penalties paid by Londoners compared to the rest of the market.

August 19, 2019

Recently released data for the first and second quarter for Stamp Duty Land Tax (SDLT) receipts shows that – overall – transactions that triggered SDLT on residential properties over £40,000 increased from Q1 to Q2 this year, having picked up in every category with the exception of transactions of £2 million and over.

With that in mind, independent lettings and sales agent Benham and Reeves looked at regional stamp duty data from 2008-2018 and the result is a revealing and rather stark contrast between that paid by Londoners and everywhere else.

For example, the total 125,000 residential property transactions in London in 2018 accounted for just 11.3% of the overall total (1,106,000), however, SDLT paid by London home buyers in that time totalled £3.6bn, a disproportionate 39.2% of the £9.2bn worth of SDLT receipts across the nation as a whole.

This is a financial penalty that has grown over time despite a reduction in transactions as a result of market uncertainty. The latest data shows that transactions in London have dipped by -33% in the last decade from 186,000 in 2008 to 125,000 in 2018. However, even with prices dropping in recent months the amount paid in stamp duty by London home buyers has jumped 86.4% in the last decade from £1.9bn to £3.6bn!

To put this into perspective, the next largest SDLT bill paid last year was in the South East at over £1.9bn. While this still accounted for 21.5% of the total bill nationwide, it is almost half that paid by London despite the South East accounting for the highest level of transactions at 16.1%.

The North West accounted for the second largest percentage of transactions last year (12.3%), but paid just the fifth largest amount into the stamp duty pot at 4.9%.

Finance Director of Benham and Reeves, Vidhur Mehra, commented:

“Stamp duty is a tax penalty disproportionately aimed at London. Despite representing approximately just 1.3% of England’s landmass, the capital is responsible for one-third of all property taxes by way of stamp duty.

This is not just because London is home to the highest property prices in the nation, but also because at higher values the levy is now designed to penalise that sector harder in relative terms.

Stamp duty is not only an outdated, archaic practice but a tax on aspiration, choking the upwardly mobile who happen to live where many of the best jobs and transport infrastructure are provided.”

Year →
2018
Location / regions ↓
Number of transactions (thousands)
Percentage of All Transactions
Stamp Duty Receipts (£ millions)
Percentage of All Receipts
Estimated property value (£millions)
London
125
11.3%
£3,635
39.2%
£73,100
South East
178
16.1%
£1,995
21.5%
£64,095
East of England
120
10.8%
£1,025
11.1%
£38,340
South West
121
10.9%
£815
8.8%
£33,500
North West
136
12.3%
£455
4.9%
£25,465
West Midlands
103
9.3%
£400
4.3%
£22,065
East Midlands
96
8.7%
£330
3.6%
£19,280
Yorkshire and The Humber
100
9.0%
£310
3.3%
£18,465
Wales
56
5.1%
£160
1.7%
£9,845
North East
44
4.0%
£105
1.1%
£7,125
Northern Ireland
27
2.4%
£45
0.5%
£3,775
England
1,023
92.5%
£9,070
97.8%
£301,440
Total
1,106
£9,275
£315,060
Year →
2008
Location / regions ↓
Number of transactions (thousands)
Percentage of All Transactions
Stamp Duty Receipt (£ millions)
Percentage of All Stamp Duty Receipts
Estimated property value (£millions)
London
186
13.4%
£1,950
30.8%
£68,460
South East
225
16.2%
£1,445
22.8%
£60,470
East of England
150
10.8%
£680
10.7%
£33,950
South West
138
9.9%
£655
10.3%
£31,530
North West
169
12.2%
£370
5.8%
£26,615
West Midlands
119
8.6%
£315
5.0%
£20,685
East Midlands
110
7.9%
£265
4.2%
£18,325
Yorkshire and The Humber
126
9.1%
£260
4.1%
£19,830
Wales
65
4.7%
£135
2.1%
£10,390
North East
64
4.6%
£100
1.6%
£9,095
Northern Ireland
33
2.4%
£155
2.4%
£7,620
England
1,289
92.9%
£6,040
95.4%
£288,960
Total
1,387
£6,330
£306,970

 

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