The tax on buying a home jumps to 3pc when the price reaches £250,000 and that means average properties will be hit.
The amount of tax paid when buying an ordinary home is about to triple, as the average cost of a property in England and Wales tops £250,000 this year.
Stamp duty land tax, payable when you buy, is levied at 1pc of the property price on anything sold for less than £250,000. However, once a property tops that price, the buyer must pay 3pc of the entire value of the home to the Government. This would push up the total tax bill from £2,500 to £7,500 a massive jump in costs for home movers.
The Land Registry's quarterly figures show an average house price of £249,958, with forecasts suggesting that the average price will top the £250,000 mark this year.
Ben Thompson from the Legal & General Mortgage Club said there was an "unpalatable symmetry" to the fact that stamp duty leaps to 3pc at or around the average purchase price. He added that the phenomenon could harm the recovery in the housing market, and thus the economy as a whole, because the price of homes will continue to bunch just below the £250,000 threshold.
"Ordinary properties should not be taxed so unfairly," added Naomi Heaton, chief executive of LCP, a property services group. "They should not be put in a higher tax band." She said the tax rise was akin to the "fiscal drag" affecting income tax, whereby more and more ordinary people are put into the higher-rate tax band because the threshold fails to rise.
However, unlike income tax, where the 40pc rate is paid only on money earned above the threshold, the 3pc stamp duty rate becomes payable on the entire purchase price of a property. Mr Thompson said this created distortion in the market, because home owners were unwilling to buy anything just above the £250,000 threshold as a result of the extra tax payable.
The result is that properties sell for less than they would otherwise be worth, he said. Data produced for The Daily Telegraph by Legal & General shows that 23pc more properties are priced in the band just below the £250,000 threshold than in other market bands, and that the opposite occurs just above £250,000. "This is a clear link to avoiding the higher threshold," Mr Thompson said.
"Right now, more than ever, it is important for tax receipts to be as high as possible. However, you can't help but wonder how much more activity in the housing market and growth might be enjoyed were stamp duty thresholds to be raised, suspended or even removed."
The £250,000 threshold for higher-rate stamp duty has been in force since July 1997. At that point, customers buying properties costing less than £60,000 paid no stamp duty, while those with properties costing between £60,000 and £250,000 paid 1pc of the purchase price. Anyone buying a property worth more than £250,000 paid 1.5pc stamp duty.
In 1997, however, £250,000 would buy you far more than an ordinary home. As the chart shows, the average house price was £79,242 in 1997 according to Land Registry figures, compared with almost £250,000 now.
Stamp duty paid on the average home
The chart shows that in 2013, once the average house price is forecast to tip over the threshold at £251,208 (according to Savills), the average home will attract a stamp duty payment of £7,536. That is almost 10 times more than in 1997, when the average property would have attracted a stamp duty payment of £792.
Despite the rise in property prices since 1997, the threshold has not moved, although the percentage of purchase price payable in tax has doubled to 3pc.
Stamp duty on property has become an important revenue earner for the Government. Although the number of house sales is down by half since the top of the boom in the mid-Noughties, the Exchequer received more than £6bn from the tax in the 2011/12 financial year. This figure is forecast to double by 2017/18.
Figures this week showed that the housing market was now at its healthiest since the financial crisis. Mortgage approvals for house purchases reached an 11-month peak in December, as lenders approved 55,785 new mortgages against 54,011 a month earlier, according to the Bank of England.
Analysts said the improvement signalled that mortgage lending was at its strongest in years, after one-off effects from previous efforts to support the housing market were stripped out.
However, experts said the fact that 3pc stamp duty was about to hit those buying average priced homes could slow down the market.
Mr Thompson said that because of flat house prices in recent years, people seeking their second step on the housing ladder would no longer be able to pay the stamp duty on their next home out of equity in their existing one.
"That can be £15,000 to £30,000 or more for many home owners, and let's not forget that home owners would have to have earned far more than this in spare gross income to afford this sum. So for many this is a step too far, hence we have a stagnant housing market, with limited choice for first-time buyers," he said.
The Government has also introduced a 7pc tax band for those with properties worth more than £2m, in an attempt to gain more tax revenue from stamp duty. The new band brings the tax bill on the purchase of a £2m property to £140,000.
Those who choose to stay put and extend their homes, rather than buy a new property, will also be hit with new tax charges from April. The Community Infrastructure Levy (CIL), which is a new planning tax, will be rolled out across England and Wales in April. This could add tens of thousands of pounds to the cost of a basement, loft conversion or other extension.
Unlike other similar arrangements, the CIL will apply to existing homes rather than just newbuild properties and will affect any home where you extend the original space by more than 100 square metres. If alterations involve any demolition, the floor area of the original rooms may be subtracted from the added space.
The rate of the CIL will be set by local authorities, and revenues can be used to fund infrastructure projects such as schools, hospitals and flood defences. In London, the Mayor's office can demand extra on top of the levy imposed by London boroughs.