Stamp duty impacting on housing market
Stamp duty is having a significant impact on the current housing
market in England and Wales, claims a new report.
Research conducted by the London School of Economics and the VATT
Institute for Economic Research believes the property tax is
preventing older buyers from downsizing and is limiting the number
of homes available for first-time buyers.
Stamp duty is an incremental tax, with properties selling for up to
£125,000 not attracting any tax, but this then rises in
increments to ten per cent for properties worth more than
Many older homeowners in expensive areas of the country are
increasingly finding themselves unable to downsize because they are
unable to find buyers willing to pay the stamp duty
This means second-steppers are unable to move into suitable family
homes and this limits the options for people wanting to become
"The key message is that stamp duty hampers mobility significantly,
it create a mismatch and distortions in the housing market. Our
analysis suggests that mobility would be 27 per cent higher if
stamp duty was abolished or replaced with an annual tax on the
value of property," said professor Christian Hilber, co-author of
He added: "If you are a young family and you have an additional
child, you’ll need an additional room, but the stamp duty is
discouraging this kind of move because of the additional cost and
lack of available homes to move into."