Rocketing property prices are swelling government tax coffers as landlords and property buyers are forced to pay more stamp duty on home purchases.
The problem is particularly acute in London and the South-East, where property prices are racing ahead of those in the rest of the country.
The number of home sales attracting higher stamp duty rates has doubled in the past 10 years.
Tax experts have also pointed out that stellar property prices are also fuelling a massive increase in inheritance tax for the Treasury – also boosted by rising house values.
Many property investing families are now in double jeopardy from the HM Revenue & Customs (HMRC).
They pay higher stamp duty on buying homes to increase their property portfolios.
Then they pay more inheritance tax when older family members die and transfer their property holdings to their children and loved ones.
The tax trap also has them stuck if they consider selling an investment property because rising home values are also pushing up the amount of capital gains tax they would pay.
The Office for Budget Responsibility forecasts that house prices will increase by 8.5% this year and 7.8% next year.
These rises will add to the tax burden of property investors.
According to official figures from the Land Registry, average house prices in London are £492,000 – putting them into the 3% stamp duty bracket and £167,000 over the 40% inheritance tax threshold.
Homes costing over £500,000 and up to £1 million attract stamp duty at 4%.
Properties priced at more than £250,000 now account for a quarter of all sales – up from just 10% a decade ago.
Prime Minister David Cameron has pledged to ease the inheritance tax crisis by raising the nil rate threshold before anyone pays the tax to £1 million – if the Tories win the next election.
So far he has been silent on stamp duty rates, although some Tory MPs have suggested the zero rate should be lifted to £500,000.