Improvements to the existing stamp duty regime would significantly boost the number of housing transactions across England and Wales, according to a new report.

Stamp duty adds thousands of pounds to the overall cost of moving home, especially in London and the South East where prices are far higher, while the 3% surcharge on second home purchases introduced last year, means property investors often see stamp duty on ordinary homes now run into the tens of thousands, and this is making the current housing crisis worse by causing a bottleneck in the residential property market.

Current stamp duty rates are deterring older buyers from downsizing and therefore freeing up homes for those further down the housing ladder, but the research from the London School of Economics and the VATT Institute for Economic Research, says that moving levels would increase by over a quarter if the tax was scrapped.

Professor Christian Hilber, co-author of the report, commented: “The key message is that stamp duty hampers mobility significantly, it create a mismatch and distortions in the housing market. Our analysis suggests that mobility would be 27% higher if stamp duty was abolished or replaced with an annual tax on the value of property.

“If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.”