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Abstract for:

The Effect of the UK Stamp Duty Land Tax on Household Mobility

Christian A. L.  Hilber,  Teemu  Lyytikäinen,  July 2012
Paper No' SERCDP0115: | Full paper (pdf)
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Keywords: Stamp duty; real estate transfer tax, transaction costs, household mobility

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

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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Abstract:

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.