Stamp duty ‘adds pressure and risk’ to the market

The Telegraph is campaigning for a change to the stamp duty system, which was reformed by George Osborne, the former chancellor, in December 2014.

His reforms made it more expensive to buy property worth more than £937,000. Commentators have argued that the change has slowed the housing market, making it more precarious.

This week one housebuilder, the Berkeley Group, said the market in the South East was slowing.

In a report it said high stamp duty rates were driving down prices at the top end of the market and driving them up at the bottom.

This means both that older people do not sell and that first-time buyers cannot afford to get on to the housing ladder. Experts warn that this effect has limited the supply of properties on the market, artificially pushing up prices.

Andrew McPhillips, chief economist at Yorkshire Building Society, said: “There’s reduced supply and demand is still high, so people are fighting over fewer properties. People aren’t speculating over prices yet, but it is having more of an impact at the bottom of the market.” Commentators have suggested exempting first and last- time buyers from having to pay in order to get the market moving again.

Cutting the rates paid by so-called “last-time buyers” might increase supply, it is suggested, as older people are encouraged to move out of large properties that are too big for them and into smaller homes.

Another proposal suggests having sellers pay the charge instead of buyers. Experts said stamp duty, which makes it harder for people to buy, was also harming housebuilders, limiting supply to the market.

One builder, Barratt Developments, said it was cutting the price of some of its central London homes by up to 10pc. Its chief executive, David Thomas, blamed Brexit and stamp duty for the central London housing slump.

The stamp duty surcharge, introduced in April, has distorted the market, as investors rushed to meet the deadline. After April 1, anyone buying an additional property had to pay an extra 3 percentage points of stamp duty. This caused a scramble by investors to buy their properties before the deadline.

Telegraph Money has been campaigning against the surcharge for second property purchases since its introduction.

Some first-time buyers have found that they have to pay the surcharge because the parent or partner who is helping them buy already owns property, making it harder to get help from family sources.