Stamp duty costs deter homeowners from moving, data shows

Stamp duty costs are preventing homeowners from moving, according to analysis from property portal Zoopla, with bills reaching five figures across southern England.

Richard Donnell, Executive Director at Zoopla, said that where stamp duty becomes a “meaningful friction”, transactions are abandoned. “For home movers, stamp duty is a near-certain cost wherever you live – and in southern England it runs to five figures,” he stated.

Six in ten property purchases are made by existing homeowners. “When the cost of moving becomes a meaningful friction, some of those moves don’t happen, especially with lower levels of house price inflation in recent years across southern England,” Donnell added.

Threshold adjustment proposed

Zoopla is calling for the government to adjust the £250,000 threshold where home movers begin paying the tax. The current threshold, where the 5% stamp duty rate starts, was introduced in 2014.

If adjusted in line with house price growth, the threshold would stand at approximately £380,000 today. This would save buyers up to £6,500 in stamp duty for purchases between £250,000 and £380,000.

The data comes as the UK housing market faces muted sales conditions, with transaction volumes remaining constrained.

Regional disparities

More than four out of five homeowners pay stamp duty in every English region except the North East, where 63.5% face a bill, according to Zoopla’s figures.

However, regional variations in costs are substantial. In Yorkshire and the North West, bills average £2,200, representing less than one penny per pound of purchase price.

Across southern England, the burden increases significantly. In the South East, 95% of home movers pay stamp duty at an average cost of £11,250, equating to 2.7 pence per pound.

In London, where the median home mover asking price is £600,000, the stamp duty bill reaches £20,000, representing more than three pence per pound of the purchase price.

The tax burden adds to existing pressures on the property market, with residential landlords also facing mounting tax pressures that are affecting investment decisions.

The disparity between northern and southern regions highlights how stamp duty costs disproportionately affect homeowners in higher-value markets, potentially restricting labour mobility and housing market liquidity in areas where property prices are elevated.