Stamp Duty is suffocating the housing market, according to a new report from Family Building Society and the London School of Economics.
The report says Stamp Duty contributes to the UK’s “dysfunctional” property market, particularly in London and the South East.
It reveals that most of the tax take is from buyers of typical family homes and would be downsizers.
Around 58 per cent of revenues were raised on the sale of properties valued between £250,000 and £1million in 2016.
The firm says revenues from SDLT have been rising steadily since the financial crisis of 2008.
Last year the tax raised more than £8bn for the Treasury, whilst housing transactions remain relatively weak.
In 2016 these were 38 per cent below the levels of the early 2000s.
Family Building Society says SDLT is the second most important factor taken into account when older borrowers consider downsizing.
Family Building Society chief executive Mark Bogard says: “There is no doubt the SDLT is suffocating the housing market. People just don’t want to write out a big cheque to HRMC when they just don’t have to.
“The Government should recognise that the housing market is a shambles and that supply simply isn’t meeting an ever-growing demand.”
Government needs to recognise that SDLT needs reform and that the Help to Buy scheme does not help older home owners downsize, Bogard adds.
He says: “It’s time for the Government to make a real difference, to a real problem.”
LSE emeritus professor of housing economics Christine Whitehead says: “Stamp duty is an increasingly heavy tax on housing transactions – which is gumming up the housing market.
“A small increase in council tax would bring in just as much revenue and would significantly reduce housing market distortions especially in London and the South East.”