Stamp duty changes have equated to 0.5 million fewer people moving home .
New Cebr think tank research highlights that increased stamp duty could be the reason for the property boom yet could also be making any downturn worse.
Cebr shows that since 1997 the amount of money raised by stamp duty went up from £675m to about £7 bn in this financial year.
The government introduced new, higher, bands for stamp duty when it came in, with stamp duty doubling to 2% of the value of more expensive homes.
This went up to 3% in 1998, 3.5% 1999 and 4% in 2000.
Increasing house prices meant more homes are becoming liable for the tax as well as the higher thresholds of the tax.
While the lower threshold at which stamp duty is charged has gone up from £60,000 to £125,000 since 1997, with the higher thresholds at £250,000 (for 3% tax) and £500,000 (for 4% tax) never having been altered.
This of course has distorted the property market.
Housing transactions run consistently below levels during the 1980s housing upturn.
Stamp duty changes property transactions have fallen by 498,000 over the last ten years.
Stamp duty has contributed to the lack of housing supply on the UK market, putting prices up.
Higher stamp duties render house prices more volatile, as they restrict supply and reduce demand.
Housing accounts for 55% of private individuals’ net worth. So increasing stamp duty increases volatility in the housing market and makes this tax dangerous.
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Stamp Duty Changes Equate to 498,000 Fewer Houses Sold
Fri, 20 Apr 2007
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