CEP LSE RSS Contact Us YouTube Facebook Twitter

Abstract:

cover
SERC/Urban and Spatial Programme Discussion Paper
The Effect of the UK Stamp Duty Land Tax on Household Mobility
Christian A. L. Hilber and Teemu Lyytikäinen
July 2012
Paper No' SERCDP0115:
Full Paper (pdf)

JEL Classification: D23; H21; H27; J61; R21; R31; R38


Tags: stamp duty; real estate transfer tax; transaction costs; household mobility

We estimate the effect of the UK Stamp Duty Land Tax on household mobility using micro data. Exploiting a discontinuity in the tax schedule as a quasi-experimental setting, we isolate the impact of the stamp duty from other determinants of mobility. Our empirical strategy essentially compares similar households with self-assessed house values on either sides of a cut-off value where the tax rate increases from 1 to 3 percent. We find that a higher stamp duty strongly negatively affects a household’s propensity to move: the 2 percentage-point increase in the stamp duty may reduce mobility of homeowners by around 40 percent. This adverse effect is mainly confined to short-distance and non-job related moves.