Around 1146,000 extra property transactions would have happened over the past five years if Stamp Duty had been axed, a study by the Centre for Economics and Business Research (CEBR) commissioned by Santander found.
The incentive to build more property would also have been higher without the levy, which reduces profits and therefore the incentive to develop, the research argued.
Property wealth in Britain is heavily skewed, with those aged over 55 owning 63% of all residential property. In part, the study noted, this was because Stamp Duty discouraged transactions and prevented housing stock being distributed between different sized households.
The tax on moving was also blamed for reducing labour market flexibility because it inhibited the incentive to relocate for employment.
Stamp Duty set to feature in Hammond’s Budget
Santander’s report is the latest to attack Stamp Duty, which has affected more buyers in recent years amid rising house prices.
Chancellor Philip Hammond is widely expected to make changes to stamp duty when he presents his Autumn Budget on November 22.
Christian Jaccarini, economist at CEBR, said: “While the under-supply of housing has rightly received much attention, our research shows that Stamp Duty significantly impedes housing transactions, meaning that we don’t maximise the benefit from the existing housing stock.
“In fact, we estimate that 146,000 more transactions would have taken place in the five years to June 2017 if Stamp Duty was removed entirely.
“The chancellor should seize this opportunity and make Stamp Duty reform a priority at the upcoming Autumn Budget.”
Miguel Sard, managing director of mortgages, Santander UK added: “First time buyers struggle to get on the ladder, young families want to move up it and the elderly want to downsize, but all are stifled by Stamp Duty.”