New research reveals stamp duty is not only suppressing transactions but is also costing the economy billions.

Some 29 per cent of adults in the UK have seriously considered moving house in the past year – a figure that rises to 49 per cent among renters hoping to purchase their first home – according to research conducted by Yorkshire Building Society.

However, annual housing transactions are declining, with people now moving home on average every 21 years, compared with every nine years in the late 1980s.

The new research cites stamp duty as a major deterrent, stating that 21 per cent of first-time buyers, 31 per cent of second steppers and 35 per cent of downsizers say it acts as a significant barrier.

How much is stamp duty?

You need to pay stamp duty when you buy a property or land over a certain price. This price is:

• £125,000 for residential properties
• £300,000 for first-time buyers purchasing a residential property of less than £500,000
• £150,000 for non-residential properties or land

The rate you pay depends on the price of the property:

• Up to £125,000 you pay zero stamp duty
• The next £125,000 (from £125,001 to £250,000) you pay 2 per cent stamp duty
• The next £675,000 (from £250,001 to £925,000) you pay 5 per cent stamp duty
• The next £575,000 (from £925,001 to £1.5 million) you pay 10 per cent stamp duty
• The remaining amount (above £1.5 million) you pay 12 per cent stamp duty

Knock-on effect of buying costs

Each house sale generates an estimated £27,000 in gross value through services including conveyancing, renovations, removals and furniture, a figure that rises to £66,000 when the wider housing chain activity is included. But fewer sales equals less revenue. Yorkshire Building Society estimates that restoring transaction levels to those seen in the early 2000s – with around 500,000 additional moves a year – could generate a further £66 billion of economic value over five years.

‘Our research shows that too many people who are ready for their next move – whether they are buying their first home, moving somewhere with more space or downsizing later in life – find themselves held back by the costs involved in moving,’ says Tom Simpson, managing director of homes at Yorkshire Building Society.

‘When fewer people move, the effects are felt right across the housing market,' adds Simpson. 'It becomes harder for first-time buyers to find suitable homes; families can struggle to move as their needs change and the wider economy misses out on valuable revenue. That’s why we believe the case for reforming stamp duty is becoming increasingly difficult to ignore.’

How can a mortgage broker help?

When looking to move home, there can be many hidden and unexpected costs involved – and discovering these too late has the potential to derail your hopes and plans. Whether you’re a first-time buyer, second stepper or looking to downsize, speaking to an experienced mortgage broker early on can help you make sense of – and factor in – the various financial commitments involved. When you’re ready, we’re here to help.