No decisions have been finalised at this stage – officials are still modelling the impact ahead of Chancellor Rachel Reeves’s Autumn Budget. Propertymark has long argued that the Stamp Duty system is restrictive and serves neither buyers nor sellers well, with tweaks to the system in recent years rarely achieving the desired outcomes.
Why Stamp Duty needs reform
Economists across the political spectrum widely criticise the existing stamp duty (and council tax) systems as outdated and unfair. SDLT makes moving more expensive, supressing economic growth and levels of homeownership, and leading to a more sluggish property market. In the South East, homes valued below £250,000 sell every 11 years, while more expensive homes are sold only once a generation, every 26 or 27 years.
Initially, the UK Government should start with a review of the current rates and bands to ensure they are keeping up with property prices. However, ultimately the abolition of Stamp Duty would make it easier and cheaper to move house, helping working-age people to be more flexible and providing greater incentives for older homeowners to right-size, freeing up properties for first-time buyers, growing families, and multi-generational living.
Why do we pay Stamp Duty?
Modern Stamp Duty in England has its origins in a tax on vellum, parchment and paper used for legal documents, which was introduced in 1664 to raise funds for a war against France – an embossed stamp was used to show the tax had been paid. Originally planned to last for four years, the tax was so successful that stamp duties have been used ever since. Amazingly, the physical stamping of documents was only retired in 2021, after a fully digital system was introduced during the COVID-19 lockdown.
The Stamp Duty Land Tax, which is currently paid in England and Northern Ireland, was introduced in the UK 2003. It was replaced in Scotland by Land and Buildings Transaction Tax in 2015, and by Land Transaction Tax in Wales in 2018. View our guide to Stamp Duty and Land Tax.
Potential benefits of a national tax
Even if the UK Government ultimately retains stamp duty at a reduced level, it would reduce the barrier to house moving, creating a greater volume of transactions and treasury receipts, and the associated economic impact of new owner occupiers fitting out their new homes.
The proposed tax would affect roughly 20% of property transactions, in contrast to the 60% currently paying stamp duty, and may help tackle some of the economic inequality and disparities driven by soaring house prices.
For the UK Government, reform could offer greater revenue stability; SDLT income, which raised £11.6 billion last year, is volatile. The national property tax could also realistically be implemented within the current parliamentary term, making it a quick win for Reeves.
Propertymark is actively engaging with Ministers and officials to feed into several areas of consultation which show this is only one part of a suite of housing reforms aimed at improving home buying and selling, alongside boosting housebuilding, and supporting the transparency of material information in transactions.
Council tax is a longer-term project
Reeves is also weighing the introduction of a local property tax to replace the outdated council tax system, which is still based on 1990s valuations. This shift would see property owners taxed directly, with the proceeds going to local councils. An overhaul of council tax on this scale would take several years to deliver, requiring Labour to win at least one more term in office.
Propertymark’s role in housing policy
Propertymark is working with UK Government departments across these and related issues. We are contributing to consultations and inquiries, including the Housing, Communities and Local Government Committee inquiry into the affordability of home ownership which focuses on:
- Challenges faced by first-time buyers and lower-income households
- Barriers to getting on and staying on the housing ladder
- How government policy and financial products could support affordability
Our Regional Executives – experienced practitioners – are feeding real-world insights into Propertymark’s responses, ensuring that the voice of our members is represented at every stage of the debate.
Wider reform is needed
If the UK Government is serious about getting more people to buy and sell homes, as well as boosting economic growth, then some wider thinking is also needed. Reform of SDLT can’t be looked at in isolation and should be focused on accommodating people’s needs, and must be linked to investment in house building and a buying and selling process that’s more affordable and less daunting
Stamp Duty is a barrier to people moving and getting on the housing ladder, so it is good to see reforms and ideas being discussed by the UK Government ahead of any potential announcement at the Autumn Budget.
The UK Government must ensure that any future changes to Stamp Duty do not restrict anyone from wanting to move and support first time buyers, second steppers, as well as those looking to ‘right-size’. Ultimately, we know that when Stamp Duty is removed or reduced, transactions increase, and this has a huge ripple effect on spending, bringing growth to the wider economy.
