Apermanent extension of the stamp duty holiday could lead to thousands more property transactions each year, according to research commissioned by Kensington Mortgages.
Estimates from the Centre for Economics and Business Research (Cebr) suggested a reduction in the rate of stamp duty would lead to 37,000 additional property transactions taking place each year.
Its analysis also found that making the stamp duty holiday permanent could generate £139m a year for the Treasury due to higher consumption and increased housing market activity.
Mark Arnold, chief executive officer of Kensington Mortgages, said: “This research demonstrates what we all intuitively know – that the stamp duty holiday has been very positive for the economy at a critical time.”
Mr Arnold added: “[Aside] from updating the threshold to reflect real world house prices, the maintenance of the £500,000 threshold could address some structural problems with the UK housing market.
“It could lead to greater regional mobility – with ancillary trickle-down benefits – as well as also stimulate more downsizing, freeing up family homes and helping to address this vital stock shortage.
“We believe now is the time to be bold and keep the threshold at its current position, or at least consider amending it to a higher level than the previous £125,000.”
Some mortgage advisers have also expressed their support for the stamp duty holiday to be made permanent amid predictions of a drop in activity when the policy ends.
Since the nine-month stamp duty holiday was introduced in July, the market has seen annual house price growth hit five-year highs and mortgage approvals for house purchases reaching their highest levels since September 2007.
An extension of the stamp duty holiday could also ease pressure in the housing market, as two mortgage industry trade bodies have raised their concerns with the Treasury that a large number of borrowers may not be able to meet the March deadline.