Peers have called for Stamp Duty to be reviewed as part of a report into intergenerational fairness.

The House of Lords Committee on Intergenerational Fairness and Provision has released a range of recommendations to address generational differences in income, wealth and access to housing.

The report warned that Stamp Duty “seriously distorted the housing market”.

It said: “Stamp Duty is seen as reducing the liquidity of the property market.

“By increasing transaction costs, it incentivises the ‘upsizing’ of existing homes where people choose to invest in increasing the size of their existing home rather than paying Stamp Duty on purchasing a new home. This could decrease the number of smaller homes which are more suitable for first-time buyers.”

Peers said the Government should review the effect of the tax on the liquidity of the housing market and consider how it could be reformed to improve the housing choices and availability for young families.

The committee also called for local authorities to have stronger powers to develop housing on publicly owned land and to borrow to fund house building, and said further regulation was needed in the rental sector beyond the tenant fees ban and minimum property standards.

It said: “The Government’s proposed reforms do not create a regulatory framework that will provide private tenants the security they need.

“This particularly affects young people who are unable to buy and becomes a greater problem as they age. Change is needed so that renters who want a long-term secure tenancy can find one.”

Other headline recommendations include phasing out free TV licences for over-75s and linking them to income, and limiting free bus passes for the over-65s and winter fuel payments until five years after someone reaches state pension age.

Lord True, chair of the committee, said: “We found that intergenerational bonds are still strong, and the evidence suggested both young and older people recognise the contribution the other makes and the challenges they face.

“However, there is a risk that those connections could be undermined if the Government does not get a grip on key issues such as access to housing, secure employment and fairness in tax and benefits.”

Commenting on the report, John Phillips, group operations director at Spicerhaart, said: “Stamp Duty tax makes up such a huge proportion of the cost of moving that many of those who want to upsize are choosing to extend instead, creating a plethora of houses all the same size and nothing in between, while at the other end of the scale, older people are staying put rather than paying to downsize and are being criticised for ‘taking up’ all the family homes.

“There is an argument that of course Stamp Duty brings in valuable income for public spending – about £8bn a year – which sounds like a lot. But what about the costs associated with people not moving because of Stamp Duty costs?

“For example, older people living in homes unsuitable for their needs which adds extra pressure to health and social services.

“I supported the cut in Stamp Duty for first-time buyers as it was a start, but said at the time, if you only help first-time buyers, property prices will be forced up as sellers try and add the money ‘saved’ onto asking prices, to help them cover their own Stamp Duty costs.

“Stamp Duty is stifling the market and is long overdue a huge overhaul. Ideally, it would be abolished altogether, but significant cuts would be a good start.”