Stamp duty is prohibiting first-time buyers and should be altered in the Spring budget, the Yorkshire Building Society has said.
Latest figures show that in 2016, a quarter of first-time buyers bought properties under the stamp duty threshold of £125,000, down from 47% in 2006.
Andrew McPhillips, chief economist at Yorkshire Building Society, said: “In its present form, stamp duty does not suit today’s housing market – it pushes up costs for those looking to buy, exacerbating affordability issues in a market where prices have vastly outpaced wage growth.
“Although our recommendations would help to alleviate some of the effects of the housing crisis, it does not address the root cause which is the lack of supply.”
The proportion of first-time buyers able to find a home under the stamp duty threshold has almost halved in a decade.
The threshold has stayed the same since 2006 despite the fact that the average house price has risen by 35% in the same period.
To levy the tax against a similar proportion of first-time buyers who paid the tax in 2006, the government would need to increase the threshold to £175,000.
Yorkshire BS has urged the government to make stamp duty a seller’s tax as it would eliminate the cost of the tax for first-time buyers whilst also helping those moving up the ladder.
John Stevenson, Conservative MP for Carlisle, added: “I have long been a supporter of changing who pays stamp duty on house sales.
“At present it penalises first time buyers and those aspiring to move up the housing ladder.
“I have and will continue to make representations to government regarding such a change appearing in this years’ budget.”
Following these recommendations, first-time buyers in the UK could save an average of £3,625, whilst those in the capital could save £13,171.