9:08 AM, 9th August 2017, About 4 years ago 3
The London School of Economics and the VATT Institute for Economic have produced a research paper predicting the level of home moving would increase by 27% if the Stamp duty levy was completely abolished.
The research indicates current levels of stamp duty are making the housing crisis worse by cause a bottleneck in the market with pensioners being deterred form downsizing by the costs and stalling families from purchasing larger homes.
The Chancellor Philip Hammond is reportedly under pressure from his own Cabinet to reform Stamp Duty to kick start the market, which is also a major contributor to the wider economy. It is thought from a previous reform that if you halved the tax then income to the treasury would actually increase.
Co-author of the report, Professor Christian Hilber, said: “The key message of our paper is that stamp duty hampers mobility significantly.
“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.
“In a nutshell, the stamp duty discourages the elderly from downsizing and young expanding families from moving to more adequate larger housing.”
Former chancellor, Lord Lawson of Blaby, told the Telegraph: “The present levels of stamp duty are clearly counterproductive, in terms of housing policy and revenue alike, and need to be reduced. For what it’s worth, when I was Chancellor, I halved the rate of stamp duty on house sales, and the revenue increased.”
HM Treasury replied saying: “Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get onto the property ladder.
“In addition, we are helping people, including young families, to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas.”
|Purchase price of property||Rate of Stamp Duty||Buy to Let/ Additional Home Rate|
|£0 – £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1.5 million||10%||13%|
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