Sometimes an important step in understanding the social impacts of a tax is to understand what it is best compared to. Council tax is a classic as it doesn't look nearly as painful when compared with average incomes as it does with pensioner incomes. Stamp duty is another. In politics it is easy to understand stamp duty as 1 per cent or 3 per cent of the value of a home which makes it sound relatively mild. However, far more relevant is the comparison with the deposit which shows how painful the tax can be for first time buyers.
The average first time buyer pays a deposit of £28130 and stamp duty of £1500. That means that stamp duty is fully 5 per cent of the average first time buyers deposit. It gets worse in London where an average first time buyer deposit of £53136 is accompanied by a £7500 stamp duty bill. In London stamp duty is on average 14 per cent of the deposit thanks to the average home qualifying for the 3 per cent slab rate. Those numbers, now looking quite significant, reflect the actual comparison people make when buying a new home and illustrate why Stamp Duty can make difficult purchases much harder.