Changes to stamp duty on housing were a missed opportunity, according to industry experts.

Rates on residential and commercial property rose from 2.5 per cent to 3 per cent for houses valued at between £250,000 and £499,000, and from 3.5 per cent to 4 per cent on houses valued at more than £500,000. Duty remained at 1 per cent for properties between £60,000 and £249,000, and zero below £60,000.

Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents, said: "[The chancellor] has used a very crude mechanism to hit housing in the south-east of England - if it is intended to have anything to do with damping the market, it won't have that effect."

Stamp duty on more expensive houses has risen in each of the last four Budgets. However, more than 95 per cent of residential sales fall within the 1 per cent band.

ichael Coogan, director-general of the Council of Mortgage Lenders, said: "Although the majority of house purchases will not be affected, raising stamp duty to higher levels inevitably leads to increased distortions in property prices. The higher stamp duty is raised, the greater the distortion it introduces to the market."

Because the tax applies to the whole purchase price rather than the excess over each threshold, vendors are going to considerable lengths to make sure their property falls under the relevant threshold. Estate agents report complicated deals involving a purchase price at the threshold limit but excluding items such as carpets and curtains; a price for these is then negotiated separately.

The CML had advocated a graduated structure to help mobility in lower-priced areas and minimise distortions.

"The failure to tier the rates will continue the practice of 'carpets and curtains planning' and the chancellor has missed an opportunity to introduce a tiered rate structure," said Simon Philip, tax partner at consultants Arthur Andersen.

There was no move to split the rates for residential and commercial property. Healey & Baker, property consultants, said the failure to split the two sectors would mean "higher trading costs reducing the attractions of property as an investment media, and impacting on the liquidity and efficiency of the market".

It warned that property was now at a disadvantage compared with other types of investment. "A liquid and efficient property market is important to all businesses, providing new property to meet business needs and giving liquidity and flexibility to occupiers. Higher stamp duty may result in a poorer operating environment," it said.

r Philip said: "It's yet another cost for business, particularly those operating in the south of England."

There was no change on stamp duty on shares, which is charged at 0.5 per cent on all purchases. Anthony Davis, of Ernst & Young, described the chancellor as "an ostrich with his head in the sand" on the issue.

"The UK is out of step with the rest of Europe, and it is only a matter of time before rates align. He will have to do it some time."

Duty on share purchases in other European countries is generally much lower: there is no duty in Germany or Spain, while France applies 0.3 per cent on transactions of more than £5,000.

Angela Knight, chief executive of the Association of Private Client Investment Managers, said a review was needed if business was to stay in Britain. "In this era of European mergers and trading environment, firms have every opportunity to choose the exchange on which they want to be listed, and they will surely want to be listed in the most favourable tax environment."

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