Duty stamps on moving plans

You agree a price on your ideal home and negotiate a really good mortgage deal - but have you worked out the cost of the move itself?

Stamp duty, lawyers' fees and local council searches can mount up to between £500 and £45,000 depending on the size of your new property, says new research from the University of Greenwich and the Woolwich bank.

And this excludes the cost of hiring a removals firm and agents' and lawyers' fees for selling your old home.

The single biggest culprit in the high cost of moving is stamp duty. The rises of April 2000 affected properties at the £60,000, £250,000 and £500,000 thresholds. Predictably, estate agents feel this is deterring buyers.

"I had a client who was selling and buying through me," says Keith Rigby of London estate agents Leslie Marsh and Co. "He totally forgot to budget for stamp duty. When he discovered he was going to have to pay about £24,000 in tax he pulled out of both deals. He couldn't afford to move," Rigby says.

The high cost of moving is affecting the property market in three ways. First, Britons are moving more often and far further than five years ago. Almost no one moves just a few streets away any more. People who want a larger house in the same locality opt for an extension to their old property instead.

"On a £1 million property the moving costs could be as much as £50,000. You could make extensive alterations and additions to an existing home for that," says David White of Cluttons agents in Beaconsfield, Buckinghamshire.

"I'm sure people must now seriously consider staying put and extending rather than moving."

Second, when people do move they try to buy at just under, or well over, the stamp duty price thresholds.

Personnel officer Helen Crossfield moved from Hertfordshire to Devon earlier this year, selling her house in St Albans for £290,000 and buying another in Exeter for £225,000.

"This was effectively a trading-up because lower property prices in the South West allowed me to buy a bigger house than I had in the South East.

"But I wanted to make sure I paid less than £250,000 to cut my moving costs," she says. Even so, her move cost around £5,000.

By contrast, estate agent Lulu Egerton has sold her two-bedroom Chelsea flat for £317,000 and bought a nearby property with twice the floor-space for £575,000. The price of her new home is well into the highest category of stamp duty. She calculates the bill for moving costs will reach £32,000.

"To justify the cost I had to make sure I was going to somewhere that was a quantum leap from my old place. I couldn't afford to move just because I wanted a bigger dining room or a nicer street," she says.

Third, fewer properties than before are being valued at just over the stamp duty thresholds. "Black holes have appeared in the property market. It's generally better not to put your property on the market priced between £250,000 and £275,000 or between £500,000 and £530,000," says Edward Rook of Knight Frank.

This could make it hard for owners to sell houses that genuinely are worth, say, £260,000. They may be tempted to ask less and lose money, or put the price much high and deter buyers.

But we should consider ourselves lucky. Stamp duty in Britain is among the cheapest in the world, says Simon English of estate agent Beaney Pearce. "In the rest of Europe it is at least 5% and in the US it can be as high as 8%."