Soaring UK Stamp Duties Raises the Cost of Moving
In the last ten years the cost of hiking up the housing ladder has more than tripled leading to homeowners being less inclined to taking the next step. This inclination to stay put is widely believed to be the cause of the current shortage of properties in the housing market which is driving higher house prices in spite of 3 interest rate hikes since August last year.
Of the factors the contribute to increased costs, stamp duties, agents fees, legal fees and moving costs - the blame lies with stamp duties up nearly 800% by some estimates to around 5000 pounds on average. Total fees are approximately 10000 pounds for the average move.
Warren Bright, chief executive of propertyfinder, said: "On top of rapid house price inflation, home sellers have to contend with the soaring costs of moving home.
"The largest factor is stamp duty, which now accounts for over half of moving costs on the average home and has risen almost tenfold in ten years.
"Without doubt, the Chancellor has been the largest beneficiary of the booming housing market."
While the cost of moving home has risen by an annual average of 12.5 percent, inflation has averaged just 1.5 percent per annum over the same period.
The extra costs are discouraging people from moving up the property ladder, leading to a shortage of properties for sale, particularly at the bottom end, and stoking house price growth.
People expect house prices to rise 6.4 percent over the next year -- and 31 percent of home seekers attribute this to too few properties coming onto the market, according to propertyfinder's latest consumer confidence index.
"The high cost of moving home has definitely contributed to the current supply shortage in the housing market," said Bright.
"In the past, when costs were low, there was little to prevent people from making a number of small steps up the housing ladder.
"Now that transaction costs -- especially stamp duty -- are prohibitive, people are more reluctant to move, or are making fewer, bigger jumps up the ladder."
Those buying in the capital are hit even harder: Halifax's research suggests that the average price paid by first-time buyers in London broke through the 250,000 pound barrier last year, pushing them into the 3 percent stamp duty band.