There are other transaction costs when buying property: conveyancing solicitors, mortgage valuers, surveyors and estate agents, but unlike stamp duty, all of these professionals offer a service for their more moderate fees.
Stamp Duty was also once a moderate fee of only 1% for properties over £60,000 and justifiable for providing a formal register of property ownership.
Property rights are the backbone of our economic system, so having a government register of who lawfully owns a house is beneficial to all property owners.
If people don’t believe their ownership rights are registered and protected by law, they will be unlikely to invest in property. But the present stamp duty rates are far above the cost of running the Land Registry.
Gordon Brown changed stamp duty from a registration fee to a revenue raiser and increased the number of bands and the rates each year from 1997 to 2000 when properties over £500,000 paid 4% tax.
Then George Osbourne turned it into an envy tax on family homes in London and the Southeast, increasing the top rate to 5% in 2011, then to 7% in 2012.
In 2014 Osbourne changed the calculation to a marginal system, with rates increasing from 2% for the portion of a property’s value between £125,000 and £250,000, to 12% for the portion above £1.5m, with an additional 3% for second homeowners.
The government has since dropped the lowest 2% charge but added a further 2% surcharge for non-UK resident purchases of UK residential properties.