Is Stamp Duty Land Tax Suffocating the English Housing Market?


November 2017

Is Stamp Duty Land Tax Suffocating the English Housing Market

In one form or another Stamp Duty Land Tax (SDLT) has been a feature of the English taxation system for hundreds of years. It raises significant revenue for the Exchequer, is easy and cheap to administer, and does not affect most taxpayers. However, there is increasing concern within policy circles that Stamp Duty Land Tax as currently configured is a major deterrent to housing transactions. The consequential silting up of the property market is making it more difficult for first-time buyers, families seeking larger properties and downsizers, especially in higher-cost areas of the country. The induced sluggishness of the housing market limits labour-market mobility and reduces the consumer expenditure associated with home moves, with knock-on effects for the economy as a whole.

This report examines existing knowledge about the effects of SDLT on the housing market and the wider economy, and presents new survey evidence about the impact of the tax on consumer behaviour. It summarises proposals about how to raise the same amount of tax revenue from property, but without distorting the housing market.

The research question is: What household types and geographical areas of England are most affected by Stamp Duty Land Tax as currently configured, and what does this mean for housing transactions, the housing market and the wider economy?

The authors look in particular at how SDLT affects two subsectors of the market: older potential downsizers and first-time buyers.