Lowering estate agent fees and replacing Stamp Duty with a land value tax could help boost property transactions, a new report claims.
Research compiled for the Council of Mortgage Lenders, studying the decline in home movers, looks at reasons behind falling property purchases and how to get the market moving.
The report, Missing Movers: A Long-Term Decline in Housing Transactions?, is written by housing market commentator Neal Hudson and property analyst Brian Green.
A survey as part of the report found that a quarter of mortgage holders were put off moving by Stamp Duty, and estate agents’ and solicitors’ costs.
It found transactions have fallen from 1.64m in 2007 to 860,000 in 2009 before bouncing back up to 1.23m, leaving a shortfall of 400,000, 80% of which were home movers.
In 2016 transactions stood at 1.23m having fallen to 860,000 in 2009, as the credit crunch throttled the housing market.
The report found that a lack of funds, specifically equity in their home, was a key factor stopping many moving.
Several solutions are put forward, such as relaxing lending criteria and incentives including equity or bridging loans as well as negative measures in the form of progressive land or property taxes.
Looking at land value taxation – a form of which was proposed in the Labour Party election manifesto – the report cites the Mirrlees Review, analysis by the Institute for Fiscal Studies, that suggested replacing Stamp Duty and council tax with a land value tax in 2010.
The CML report said: “The benefits in regard to household moves are strong. In addition to the case made by The Mirrlees Review for the greater fairness of a land value tax, it suggested that the Stamp Duty defies the most basic of economic principals by taxing transactions. This clearly reduces the propensity to move.
“Furthermore, the introduction of a land value tax may encourage the more efficient use of the housing stock.”
The authors express support for this but admit a land value tax has been seen as controversial and considerable thought would be needed as well as transitional arrangements.