More than two out of three people would prefer to move than improve their property but the rising cost of stamp duty is having a serious impact on whether people can move house.

And almost half of those surveyed by internet site PrimeMove.com said they are prevented from moving because of the high cost of stamp duty, which raked in £4.6 billion for the Treasury in 2005/2006 an increase of 175% in the last five years.

The property tax hits the lower end of the market hardest with buyers moving from the 1% to 3% threshold experiencing the highest hike in stamp duty.

As house prices continue to rise especially in London and the South East, where property prices are historically high, many more homebuyers are paying the second level of stamp duty of more than £7,500 (or 3%) for properties over £250,000. This now includes the majority of first-time buyers in this region.

Only 15% of buyers escaped paying the tax last year, and over 56% of first time buyers are now having to pay at least 1% of the purchase price, as fewer properties are available under the £125,000 threshold.

The PrimeMove poll also revealed that over 40% of people were finding it increasingly difficult to find the right home to move to, despite the fact that over 70% of people surveyed would rather move than improve their current homes. A factor which is likely to worsen if the current stamp duty thresholds remain the same and interest rates rise again. 

Additionally their moving plans were on hold because their income was no longer in line with house prices.

Henry Pryor, founder of primemove.com, commented: “Cost has always been the main impediment to buyers moving but, in recent years, this has had less effect on the market with many willing to borrow more to fulfill their property dreams. What these figures now show is that people have begun to reach their limits in terms of affordability; the pressure of stamp duty, higher interest rates and reducing incomes in real terms are taking their toll on home owners.”

“Unless something is done by the government to help combat the growing financial pressure on home buyers the housing market will begin to be seriously affected in 2007.”

“The most high profile move this year is likely to be in SW1, where the Chancellor will move without having to pay 4% on his £1m plus property. Can this really be fair?”

The survey also revealed that over 35% of buyers were put off moving because of the stress of the home buying process, although internet searching was cited by more than half of buyers as the easier way to find a property.

“Although moving will always have an element of hassle, the internet is a real boon in helping to reduce some of the stress,” added Mr Pryor. “A lot of the initial search for a property can be carried out on the net, relieving buyers of some of the donkey work and providing them with far more options than ever before,” he said.