The Stamp Duty threshold at which homebuyers begin paying tax has remained unchanged since 2006, despite average house prices in England rising by 84% over the same period, according to analysis from Coventry Building Society.
The £125,000 nil-rate threshold was introduced in 2006 and, while temporary increases were implemented following the financial crisis and during the pandemic, it has repeatedly reverted to the same level.
Coventry Building Society said the average home in England now costs around £291,000, compared with approximately £159,000 when the threshold was first introduced. As a result, the average property now sits more than £166,000 above the nil-rate threshold, compared with £34,000 in 2006.
The mutual’s analysis suggests this has led to a sharp increase in the amount of Stamp Duty paid by homebuyers. The tax bill on an average-priced home has risen from £340 in 2006 to £4,570 today, representing an increase of 1,260%.
The higher tax bills continue to generate substantial revenues for the Treasury. Latest HMRC figures show homebuyers paid £1.1 billion in Stamp Duty during May, taking total receipts for the year to date to £5.4 billion.
The impact varies across the country. Coventry said buyers purchasing an average-priced property in several northern regions would not have paid any Stamp Duty when the current threshold was introduced. In the North West, for example, the same purchase now attracts a tax bill of around £1,800.
In London, the Stamp Duty bill on an average-priced home has risen from £1,334 to more than £17,000.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “The question is whether a threshold designed for the housing market of 2006 still make sense for a housing market twenty years later.
“When the current Stamp Duty thresholds were introduced, Tony Blair was Prime Minister, the first iPhone hadn’t been released, and the average home in England cost £159,000. Today the average price is a lot different – but the starting point for the tax hasn’t moved.
“It’s not surprising that buyers are paying much larger tax bills when the threshold has been standing still while house prices have risen all around it. In some parts of the country buyers who wouldn’t have paid a penny in Stamp Duty when the thresholds were introduced are now facing bills worth thousands of pounds.
“Governments have recognised the need to temporarily adjust Stamp Duty during periods of market stress, whether that was after the financial crisis or during the pandemic – but the underlying structure of the tax has barely changed.
“The housing market today looks very different to twenty years ago, and with people facing increasingly large tax bills, some serious thought should be given to how property taxes can be made fit for 2026 and beyond.”
The findings are likely to add to the ongoing debate around housing affordability and transaction costs, particularly for first-time buyers and movers facing higher upfront expenses when purchasing a home.
Recent government proposals aimed at modernising the homebuying process have focused on reducing delays and improving transparency, but industry participants continue to argue that Stamp Duty remains a significant barrier to mobility across the housing market.
