Cabinet minister: Stamp duty is 'stopping people moving' and must be reformed
Stamp duty is stopping homeowners from downsizing and must be reformed, a Cabinet minister has said.
The minister urged Philip Hammond to “deal” with the tax as it has exacerbated the housing crisis.
The MP told the Daily Telegraph: “It is a big transaction tax and that has a big implication in terms of economic growth - it is stopping people moving.”
The comments come as a new report is published by the London School of Economics and the VATT Institute for Economic Research which found the rate of moving would increase by 27% if stamp duty was removed.
The report’s co-author 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.”
Mark Littlewood of the rightwing Institute of Economic Affairs said: “The Chancellor should be seeking to scrap stamp duty altogether. It is not a tax on wealthy property owners. It is essentially a tax on moving home.
“Britain’s extortionate housing market is broken enough already without further penalising homeowners by charging them thousands of pounds unless they stay put in their current property.
“The government is actively encouraging people, especially the elderly, to remain in large properties when they would prefer to downsize and release a family-sized home onto the market.
“Given the difficulty young families already face in getting on the housing ladder, it is an absurdity that the government is making it even harder through this outdated and nonsensical tax policy.
“If the Chancellor fails to take action in the budget this autumn, he will be guilty of exacerbating the crisis in our housing market.”
A HM Treasury spokesman said: “Almost 90 per cent of people want to own a home, but only 63 per cent 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.”
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