Kemi Badenoch’s promise to abolish stamp duty was met with cheers by the Conservatives, but is it a good idea? We put two property experts head to head in this week’s Debate

YES: Stamp duty incentivises people to stay in unsuitable homes, reducing labour mobility

Stamp Duty Land Tax (SDLT) is restricting mobility in the UK housing market. From first-time buyers to young families and downsizing pensioners, many are effectively trapped in their homes because SDLT costs can often exceed a year’s income, with consequences that extend far beyond individual households.

The housing market is a crucial enabler of labour mobility. When people can move freely, they take on new jobs, start families and grow businesses. SDLT actively disincentivises this. A 2017 study by the London School of Economics estimated that for every one per cent increase in SDLT, there is a 17-20 per cent decrease in the probability of a household moving. In effect, SDLT penalises dynamism.

SDLT also incentivises people to stay in unsuitable homes – families remain in homes that are too small, while older individuals stay in properties that are too large, simply to avoid paying the tax. This is a gross misallocation of housing stock in a country already facing a chronic shortage. If people could move more........

© City A.M.