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

Listed author(s):
  • Christian A. L. Hilber
  • Teemu Lyytikäinen

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.

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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0115.pdf
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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0115.

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Date of creation: Jul 2012
Handle: RePEc:cep:sercdp:0115
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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