Experts have told the Daily Express that wholesale reforms of the hated property tax were vital to keep alive the homeownership dream of millions. Cutting the levy would allow elderly people to downsize from big former family homes more cheaply and put more properties on the market for the younger buyers, they said. Prime Minister Boris Johnson and his Chancellor Sajid Javid were yesterday urged to “throw the kitchen sink” at the issue. 

Last week the new Prime Minister suggested drastically raising the threshold for paying stamp duty from its current level of £125,000 to £500,000. At the same time the top rate should be cut from 12 percent to seven percent. 

Now the Daily Express understands that Mr Javid has ordered officials to look into overhauling stamp duty following concerns the tax is having a negative impact on the housing market. 

Action to reform the tax could come as early as an emergency Budget pencilled in for October 7. 

Yesterday housing experts and campaigners demanded Mr Johnson and the Chancellor follow through on the pledge saying it was “beyond doubt” that stamp duty stopped people moving home. 

Scott Simmonds, of the TaxPayers’ Alliance, said: “Many taxpayers were over the moon to hear Boris talk of raising the stamp duty threshold, as well as lowering the top rate. 

“Stamp duty is one of the main reasons housing costs have gone through the roof. 

“There’s a housing crisis in this country, with many people unable to afford to buy their own home. 

“But stamp duty land tax wacks up costs for buyers and means that people who would like to downsize are stuck in large houses, while young families are trapped in homes which are too small. 

“The new Prime Minister should throw the kitchen sink at this issue, with real reform of the planning system and even abolishing this hated tax completely.” 

The growing clamour comes as figures show rising numbers of elderly people are stuck in houses that are too big for their needs but cannot downsize because of crippling costs boosted by stamp duty. 

The shortage of family homes mean young families are competing to buy the shrinking number that are on the market forcing the prices ever upwards. 

Figures from mortgage lender Nationwide showed that 54 percent of privately owned homes are under occupied – meaning they have two or more spare bedrooms – compared with just 15 percent in the private rental sector. 

And two out of three homeowners aged 65-plus have two or more spare bedrooms. 

Homeowners wanting to buy a smaller property have to pay the full stamp duty levy which can add thousands to the cost of a move. 

Although stamp duty thresholds have been cut for first-time buyers, there are no incentives for older homeowners to sell up and downsize. 

Stamp duty is a tax which homebuyers, with the exception of most first-time buyers, must pay when purchasing a property costing more than £125,000. 

A price between £125,001 and £250,000 means a two percent payment, then five percent is due on the portion from £250,001 to £925,000. 

The next threshold of 10 percent is due on the amount between £925,001 to £1.5million and 12 percent is payable on everything above that. 

The total levy on a home bought for £275,000 is £3,750. 

Steve Wilkie, managing director of retirement mortgage experts Responsible Life, said: “Stamp duty is the property equivalent of the mugger who hangs around at the cashpoint. 

“Someone downsizing from a £900,000 home to a house worth £700,000 will forfeit £25,000 at the outset to the Treasury. That’s a 12.5 percent hit for the privilege of moving and freeing that house up for a family. 

“Sums like this are a hammer blow for people trying to free up cash for retirement and this figure doesn’t even include the cost of moving, legal and surveying fees. 

“All too often when it comes to downsizing and stamp duty the sums just don’t add up. 

“This ‘dead’ money is the greatest disincentive to downsizing for those who are no longer working and it’s beyond doubt that stamp duty is largely to blame for the steady rise in under-occupied homes.” 

Latest stamp duty figures from HMRC illustrate that people are not moving with the amount raised falling year-on-year. 

Published yesterday, the data from HM Revenue & Customs showed the Government collected £1.8billion in stamp duty receipts from residential properties in the three months to June – six percent less than in the same period the year before. 

The PM’s proposal to raise the threshold to £500,000, when combined with the properties that are already not liable for stamp duty, would mean an estimated 770,000 homebuyers would not pay the tax each year, according to think-tank Onward. 

Housing Minister Esther McVey said: “As the Prime Minister has made clear, we’re determined to close the opportunity gap and give millions of young people the chance to own their own home. 

“Recent figures show the highest number of new homes getting built in more than a decade, and since 2010, government-backed schemes such as Help to Buy and stamp duty relief have helped over half a million households into homeownership. 

“Working with local communities, we will build the homes this country needs and people want to live in.” 

Costly lesson for first-timer

Graphic designer Jemima Compton has learned the hard way how difficult it is to step on the housing ladder. 

Ms Compton, 28, is more than £1,000 out of pocket after her intended flat purchase came to nothing. 

Her offer was accepted but after she had commissioned a solicitor and a survey, that revealed a crack in a wall. 

It was a rude awakening to the expenses involved. 

She says: “I was paying £700 a month plus bills to rent in London, near where I work, and I was never going to be able to save enough for a deposit so my mum and dad helped me out. 

“Then I found the mortgage application process complicated and slow. The vocabulary was strange and there was so much to take in about interest rates, fixed deals or tracker deals. I just didn’t want to be ripped off. 

“Having to pay a broker to guide me through the maze, and a solicitor and surveyor, and still having no home of my own was a bruising experience. 

“Property is so expensive. The stamp duty exemption for first-time buyers like me is welcome. 

“But I think a lot of young families and older people really struggle with the idea of paying thousands of pounds to the Treasury.” 

Since her purchase fell through, Ms Compton has had to move out of her rented accommodation and live between her aunt and friends. 

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