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Stamp duty costs one in four home buyers 'over £7,500'

More than a quarter of home buyers in England and Wales are now paying stamp duty at the higher rates of three percent or more and are facing bills of more than £7,500.

The research has been published by the TaxPayers' Alliance, which is calling for a cut in the "punitive levy".

Stamp duty adds 'over £7,500' to the cost of buying a home, say the TaxPayers' Alliance Credit: PA

Last year the tax raked in £4 billion for the Treasury, with £3.6 billion of that generated by the 3 percent rate.

But a Treasury spokesperson says cutting stamp duty would lead to other tax hikes.

She said: "At a time when we are focused on reducing the deficit, cutting stamp duty land tax would create a significant cost to the Exchequer and this would have to be met through increasing other taxes.

"We believe there are other more effective ways to support the housing market, such as improving access to finance."

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Stamp duty has become a 'major dampener'

The Homeowners Alliance said stamp duty had been "transformed from a small irritant to a major dampener on housing activity", which has risen seven times faster than inflation over the last decade-and-a-half.

It said in 1997, the Government made just £830 million from the residual stamp duty, but it was eight times higher in 2007.

The Homeowners Alliance is calling for a radical overhaul of the stamp duty system Credit: David Cheskin/PA Wire

The Alliance is urging for a radical overhaul of the system including first-time buyers being exempt from paying any stamp duty at all.

If stamp duty thresholds had risen in line with house price hikes in recent decades, the £250,000 threshold would now be over £600,000 and the £500,000 threshold would have been lifted to £1.2 million, the group said.

Housing market is 'choked' by rising stamp duty costs

The housing market is being "choked" by increasing stamp duty costs, a report has warned.

The typical stamp duty paid when buying a home has rocketed more than tenfold since the mid-1990s, campaign group Homeowners Alliance said.

The housing market is being "choked" by soaring stamp duty costs, a report has warned Credit: Chris Ison/PA Wire

A report from the group showed that the average stamp duty paid by home buyers had risen from £532 in 1995/96 to £5,957 by last year.

It argued that a major factor behind the sharp drop-off in home ownership rates was down to the "ramping up" of stamp duty costs by successive governments.