Since the government introduced the first-time buyer threshold in 2017, the average price paid by someone buying their first home in England has risen from £202,820 to £254,110, according to the Hamptons – a jump of 26 per cent.
In the country, the average first-time buyer still pays no tax, but in London, where values are much higher, first-time buyers pay more in stamp duty than the average buyer in England. Last year, the average first-time buyer bill in London was £8,238.
If the first-time buyer’s nil rate were adjusted to £380,000 to reflect the 26% growth rate since it was introduced, a first-time buyer in the capital would save almost £4,000.
Ms Truss could also introduce higher nil classes for other customer groups. Mr Cook said: “We should consider targeted relief for a smaller dwelling – perhaps similar in scale and design to that available to first-time buyers – to remove one of the barriers to making more efficient use of our existing housing stock.”
Using stamp duty to promote energy efficiency
The government could also consider lower rates of stamp duty for homes that are more energy efficient, Mr Cook said. “Especially because housing is still the problem child of reducing our carbon emissions. This would further encourage existing home owners to undertake pre-sale improvements.”
Last year, the government was supposed to be thinking plans prepared by the Energy Efficient Infrastructure Grouptrade body, for “green stamp duty”.
This would be based on an energy efficiency measure such as an energy performance rating of 50.
On either side of this benchmark would be tax incentives and disincentives. EEIG’s David Adams recommended a normal stamp duty adjustment of one percentage point in either direction.
Under the proposals, someone buying a new-build end-of-terrace “Standard Homes of the Future” EPC Band A for £250,000 would save £1,653 in stamp duty. Their total bill would drop from £2,500 to £847.
However, a £250,000 end-of-terrace house from 1900 with an EPC E rating would cost the buyer an extra £2,296 in tax, more than doubling the total stamp duty bill to £4,796 – more than five times the bill for someone buying an energy-efficient home of equal value.