Stamp duty is making the housing crisis worse because it is deterring older homeowners from downsizing, according to a new report.

It comes amid a concerted campaign by some Conservatives to convince the Chancellor to reform the system in the Autumn budget, it has been reported.

The document, from the London School of Economics and the VATT Institute for Economic Research, found the rate of home moving would be 27% higher if the levy was completely abolished.

At the moment, stamp duty costs £143,000 on a £2m property or £20,000 on a £600,000 home.

Image: Stamp duty is currently £20,000 on a £600,000 home

Professor Christian Hilber, who co-authored the report, said: "The key message of our paper is that stamp duty hampers mobility significantly.


"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.

"In a nutshell, the stamp duty discourages the elderly from downsizing and young expanding families from moving to more adequate larger housing."

One Cabinet minister told the Daily Telegraph the issue had "a big implication in terms of economic growth".

In its manifesto at the last election, Labour Party promised a "New Deal for first-time buyers" that would cut up to 40% off the price of a home for people "on ordinary incomes", as well as giving a two-year holiday from stamp duty charges.

"Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get on to the property ladder," a Treasury spokesman said.

"In addition, we are helping people - including young families - to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas."