Stamp duty thresholds have lost home sellers £260m since 2012

STAMP duty is distorting the housing market, losing sellers over £260m in the past two years, according to analysis from property website Zoopla.

Research conducted by the website demonstrates the effect of the “dead zone” for stamp duty. Since the tax rises on the price of the whole property if it edges over £125,000 or £250,000, prices are bunched just below the thresholds, losing sellers money.

The firm suggests that around 37,000 properties in total have been deliberately underpriced to avoid the slab system of duty since April 2012. The duty means that if a house costs £249,999, the whole value is taxed at one per cent, whereas if it costs £250,001, it is taxed at three per cent.

Because of this effect, 25,109 fewer houses than expected were sold between the £250,000 and £265,000 bracket during the period, and 6,413 fewer than expected in the £126,000 to £130,000 bracket. At the £250,000 mark, Zoopla says that the average price reduction is costing sellers £7,176.

“The current stamp duty system distorts the market and prevents thousands of sellers from achieving the full value of their property when they come to sell,” said Zoopla’s Lawrence Hall.