Raising the stamp duty threshold to £500,000 would remove 90 percent of property transactions from paying the duty.
That’s the proposal in a new report called Stamping Down from the think-tank the Centre for Policy Studies (CPS).
Raise threshold to increase sales
The report’s author is Alex Morton, a former adviser to David Cameron and now head of policy at the CPS.
He says abolishing stamp duty altogether or raising the threshold at which buyers pay the duty to £500,000 would increase the number of property transactions in England.
Such a move would also spur developers into building more homes because there would be no tax bill for buyers.
At the moment the average home buyer in England is paying £2,300 in Stamp Duty Land Tax. The biggest bill falls on those buying in the south-east where they must fork out more than £6,000.
‘Tax on mobility and aspiration’
The CPS report calls stamp duty a tax on mobility and aspiration. At the moment stamp duty brings in £5.1 billion every year in England.
However, the CPS modelling says raising the threshold to £500,000 would take 90 percent of transactions out of the duty’s reach and only cost the Treasury about £1.6 billion annually.
Its report says any change should only be for residential property transactions. Currently buy-to-let property buyers and those purchasing an additional home pay higher rates of stamp duty.
To offset any losses from hiking the threshold, the CPS is proposing a levy on non-resident overseas buyers purchasing property in England.
Bold action needed on stamp duty
Robert Colvile, CPS director, said: “It’s no coincidence that stamp duty is one of the taxes that people hate the most.
“It’s a huge barrier to people living in the kind of homes that best fit their families and their lives.
“And, as our report has shown, the current sky-high levels are doing more harm than good.
“We urge the Government to take bold action to stamp down on stamp duty and get the property market moving again.”