STAMP DUTY & HOUSING

According to recent research by leading property surveyors and developers, the current stamp-duty/land-tax system is causing a huge bottleneck to develop in the UK's current housing market.

As more and more buyers are queuing to make their first property purchase, but are perturbed from doing so due to rising property prices, and the hefty stamp-duty payable on purchase.
Stamp-duty is a land-tax paid which is paid each time a property is purchased. It was officially introduced by the Finance Act 2003, and has been in place since December 2003. Like all other taxes, it is administered and collected by HM Revenue & Customs. 

 
The current stamp-duty system is charged on a sliding scale, and is dependent on the value of the property. The purchase-price of the property is sliced into "value brackets", or slots.
For example, for a property priced at £550,000, the first £125,000 value of the property will not draw any stamp-duty tax, as this would be the "tax-free" element of the property.
The second £125,000 portion will attract stamp-duty at 2%, which is the current starting-rate. The third and remaining portion of £300,000, will fit in the "£250,001 - £925,000" slot, and attract stamp-duty at 5%.

This apportionment will result in total stamp-duty of £17,500, which is over 3% of the total property-value. 

 
This current system is causing the UK's housing market to come to a halt. It is discouraging young and first-time buyers from owning their first homes, as any reasonably sized home, particularly in London, will cost an upwards of £275,000, attracting stamp-duty tax of £3,750 and upwards.
Older and more seasoned home-owners, who are residing in houses much larger than the space they actually need, are hesitant to downsize and move to smaller homes, again to avoid paying stamp-duty, as this will be paid when they purchase their next home.

This has resulted in a lack of larger, and more affordable homes being available to first-time buyers. 
Furthermore, the current stamp-duty-tax system, along with a lack of affordable homes, has gradually limited the number of property-transactions, particularly in greater-London and regional areas.

 
Stamp-duty is not only preventing most first-time buyers unable to buy, but also rendering the sellers are unable to sell, as most private vendors are stuck in a chain, and can only purchase their next home, once their one is sold. This is particularly so around high-value areas, South-West London. 

 
Several Cabinet Ministers have noticed the current slump in the housing-market, and the affect it is having on the overall British economy. Several are now urging The Chancellor Philip Hammond to do a complete overhaul of the stamp-duty system, in the hope of resuscitating the housing market, and helping the overall economy, on which it heavily depends.