For many domestic owner-occupiers, high prices and stamp duty make stepping up the ladder in PCL prohibitive. A move from the average one bedroom (£880,500) to the average two bedroom apartment, means finding an additional £686,000 including the stamp duty bill. This could finance extensive renovation works.
While the price differential is so wide and the cost of moving so high, it is no surprise that where possible home owners are choosing to renovate, digging deep into their basements, converting their roof space or extending.
Conversely, down-sizers are also reluctant to move given the stamp duty bill. It is often more cost effective to shut off the top floor, live downstairs and just stay put. In a space-constrained market this isn’t an optimal allocation of resources.
There is no doubt that prohibitive purchase costs are capping transaction levels. The Government should reconsider its tax changes.
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