Stamp duty hits 50% of first-time buyers

Fifty per cent of first-time buyers paid stamp duty during March, despite the threshold at which the tax kicks in being doubled, new figures indicated today.

The Council of Mortgage Lenders said half of those taking their first step on to the property ladder during the month were liable for the tax.

The figure rose to 80% among former owner-occupiers who were trading up the ladder.

The high number of people being caught by stamp duty came despite Gordon Brown, the Chancellor, increasing the level at which the tax started to £125,000.

The figures were revealed in the CML's new monthly regulated mortgage survey, which covered 90% of the mortgage market.

Michael Coogan, the council's director-general, said: "The survey shows that the proportion of mortgages taken out by first-time buyers is low.

"With half of them having to pay stamp duty, it is clear that tax continues to add to their affordability problems. Reform of stamp duty is long overdue.

"If it had been uprated in line with house price inflation since 1997, the threshold would stand at £145,000, helping many more first-time buyers on to the property ladder and into their own homes."

The survey also showed there had been a fall in the number of people remortgaging to get a better deal, with remortgaging accounting for £10.3bn or 36% of total lending.

That was 5% less than during the previous month and 10% less than in March 2005.

The number of people taking out fixed-rate mortgages fell slightly to 69% of all loans, down from 70% in February.

The group said this was the lowest level since August last year, and reflected the rise in medium and long-term interest rates that had reduced the attractiveness of fixed rate deals.

It added that the downward trend in the proportion of people taking out fixed rate loans was likely to continue in the coming months.