A falling property market makes cutting the stamp duty tax necessary, it has been suggested.
The stamp duty tax has been declared no longer fit for purpose by the Royal Institution of Chartered Surveyors (Rics).
According to the body, the tax should be lowered by the government - and expanded into a two tier system. This would mean that homebuyers are free of the one-off fee - which is payable for most UK homebuyers - for the first £150,000 of their property purchase, and would pay 2.5 per cent duty for the next £100,000 and five per cent thereafter.
Under the current system, the tax is charged at one per cent of the sale price of properties worth between £125,000 and £250,000, three per cent for homes under £500,000 and four per cent for homes priced above that threshold.
Rics admits that, should these proposals be adopted, the government would lose up to 24 per cent of its revenue for the tax: a factor which could lead to it being resisted by ministers. However, the body argues that the current property slump - with house prices dropping by 2.5 per cent a month according to lender Halifax - makes a reduction in the costs of buying property more necessary than ever.
In a statement, the institution said: "Rics believes that government should lower barriers arising from [stamp duty] for those moving onto and up the housing market. This has increasingly been an issue as prices rose and government received a stamp duty revenue bonanza.
"But in a world of static or falling prices, these barriers further drive down transactions with a knock-on impact on the economy."
