Stamp duty hitting house sales at lower end of market

STAMP duty changes are driving up property prices at the lower end of the market, a study by one of the country’s biggest housebuilders has found.

It also found that increases in stamp duty introduced in 2014 had slowed the housing market in the south-east of England, where the shortage of homes is most acute.

A study by the Berkeley Group, one of the country’s biggest builders, found the market in the South East “is slowing, both in terms of second-hand transactions (harming mobility) and the supply of new homes”.

The increase in stamp duty – which only affected the most expensive price bracket – lowered prices for more expensive properties, but forced them up for cheaper homes as fewer people moved house, the study found. It said: “In London and the South East, where prices are higher and the housing crisis most acute, the changes have been inflationary at the bottom end of the market and deflationary at the top.”

The Daily Telegraph has begun a campaign calling on Philip Hammond to review George Osborne’s 2014 stamp duty reforms in next week’s Autumn Statement. The former chancellor’s reforms replaced the long-standing “slab” system, through which home buyers were charged a percentage of the full purchase price as soon as it hit certain thresholds, with a “slice” approach, with different percentage rates charged to each portion of the price.

There is no levy under £125,000, two per cent up to £250,000, five per cent up to £925,000, 10 per cent to £1.5 million, and 12 per cent above that.