Most first-time buyers are now liable for stamp duty

The housing industry has called on Gordon Brown to raise the stamp-duty threshold for first-time homebuyers after figures yesterday showed more than half were paying the tax.

The share of first-timers paying the duty has jumped from 48 per cent to 56 per cent within the space of a year, the Council of Mortgage Lenders (CML) said.

The increase came despite the Chancellor doubling the exemption from the duty to £120,000 in his 2005 Budget.

However, a surge in house prices since September last year has led to an 8 per cent increase in the number of first-time buyers being hit with a stamp duty bill, CML said. "Overall, affordability has worsened, especially for first-time buyers," Michael Coogan, the CML's director-general, said.

The Royal Institution of Chartered Surveyors called on the Government to raise the threshold to £150,000. "The structure of stamp duty is antique," Jeremy Leaf, its housing spokesman, said. "This tax needs to catch up with the property market and house prices."

Helen Adams, the managing director of the first-time buyer website FirstRung Now.com, said: "The Chancellor has been trumpeting relatively small levels of increases in the stamp duty threshold - nowhere near enough to help areas of the country where there is the greatest need."

The CML said only 15 per cent of home movers escaped the tax in August compared with 21 per cent a year earlier. Stamp duty receipts have more than tripled since 1997-98, rising from £3.5bn to £12.2bn, buoyed by a 22 per cent increase last year.

The Treasury said the CML's figures were wrong as they were based on homebuyers who were not also selling, which includes divorcees and second-home purchases. It said the true figure for first-timers paying stamp duty was less than half, although it did not give a figure. The CML was not available to comment on the Treasury's claim.

There was evidence of the strength of the housing market from figures showing that the prices of properties in London had hit fresh record highs. Prime London property for sale rose by 11.7 per cent annually, to reach an average of £969,288, according to the property website primelocation.com.