‘Draconian’ Stamp Duty will trigger HUGE house price CRASH by stopping elderly downsizing
STAMP duty is killing Britain's property market, raising the risk of a house price crash that could topple the economy, a top Government minister has warned.
By Lana Clements
Britain's house prices are at risk from stamp duty
The levy has been dubbed a "tax on moving" and is part of the reason house sales have fallen off a cliff in recent months, according to experts.
The prospect of paying thousands of pounds in stamp duty discourages people from moving and has steadily helped drain fluidity from the market.
Older home owners who wish to downsize, freeing up housing for younger families, are more likely to stay put when faced with the levy.
At the same time, buyers and sellers at the top end of the market, who now face rates of 10-12 per cent, have stopped moving.
It has a knock-on effect across the market, and is thought to be a factor behind record low levels of homes for sale.
An anonymous Cabinet minister told the Telegraph the tax could have "a big implication in terms of economic growth".
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The rate of home moving would rise by more than a quarter if stamp duty was scrapped, according to a report fro the London School of Economics (LSE).
LSE Professor Christian Hilber said: "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."
The lack of supply has pushed house prices to record highs in recent years.
Affordability is one of the biggest obstacles for first-time buyers trying to get on to the ladder.
And falling demand is putting downward pressure on values, with growth now at levels not seen since 2012, according to recent measures.
Chancellor Philip Hammond has now been urged to reform the tax in the Autumn Statement.
Stamp duty has hit more people amid rising house prices.
More than three quarters of first time buyers now pay stamp duty, up from 47 per cent in 2001, according to Lloyds Bank.
Homebuyers in England and Wales paid £8.3 billion in stamp duty in 2016 - £1.2 billion more than in 2015
Andrew Mason, Lloyds Bank mortgage products director, said: "“Rising house prices have caused stamp duty payments to continue to increase despite the reforms that came into effect from December 2014.
"Escalating stamp duty payments have contributed to significant increases in moving costs in recent years.”
Toby Whittome, director of sales at estate agency Jackson-Stops & Staff in London, recently labelled the tax is "draconian".
He said: “It is quite clear stamp duty increases are designed for yesterday’s market and are proving wholly unsuitable for today’s.