22 Aug

Stamp duty impacting on housing market

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 £925,000.

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 liability.

This means second-steppers are unable to move into suitable family homes and this limits the options for people wanting to become homeowners.

"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 the report.

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."ADNFCR-1222-ID-801838934-ADNFCR

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