Senior figures in the property industry are continuing to voice strong opinions on the government’s proposed overhaul of the housing tax system – including the potential introduction of a new levy to replace stamp duty and council tax.
While many acknowledge the need for reform, there is a growing call for the Treasury to seize this opportunity to get it right. Industry leaders warn that any new system must be fair, effective, and fit for purpose – not simply a punitive tool to raise revenue.
They caution that poorly designed tax changes risk punishing homeowners and undermining confidence in the housing market. Instead, the focus should be on creating a tax structure that supports long-term housing goals and works for everyone – not just the Exchequer.
Dominic Agace, chief executive of Winkworth, said: “Stamp duty reform is welcome. It is dead money in a transaction and it limits moving home, exacerbated in the SE of England by the Osborne reforms in 2014. It makes sense to change it to a tax paid for by a seller as this will help move it to those realising gains, which on the face of it makes sense and could see an increase in property transactions and spur prices on.
“However, the worry is in the current market it could just become a cash grab taking more money out of the housing transaction, therefore still limiting people’s ability to move home and preventing downsizers moving through fear of triggering the taxable gain.”
Agace says he wants to see a reduction in the tax taken out of the transaction by the government, to encourage downsizers and greater social mobility.
“The increased tax receipts for the government from increased volumes have now been proven by various recent stamp duty changes and holidays and the surge of activity they have created, most recently this April,” he added.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Is this just council tax in another name? In any event the council tax system needs revising because there are so many anomalies but the cost of doing so and the time involved would be prohibitive.
“There are lots of issues with regard to values and type of property in the present system – for example, some residents may pay relatively less than others even though their properties are now much more valuable because council tax was set at a time before gentrification or other improvements.
“But it is all about the optics – it is not just about introducing another tax, a separate tax would have to be consulted on, would take time to badge and produce – so the easiest way to increase revenue would be to raise council tax. But it all depends on by how much needs to be raised and whether more structural changes take place.”
Leaf says he is very much in favour of incorporating this tax as a substitute for stamp duty as the latter is a tax on moving.
He explained: “We are trying to encourage growth; as a country, we want to see improved job and social mobility. Stamp duty stops that, particularly among those on the margins, such as first-time buyers, as it is such a big investment.
“We can see the advantage in taking tax from people who have benefited from an increase in property values but the fear is that it is going to impact the vulnerable in particular. Those of retirement age, say in their late sixties, might be able to move into a flat or bungalow (should they be able to find a suitable one) with not too much of an issue. But for those more on the margins, say in their early eighties, who are not so mobile and don’t want to move out of an area where they have lived comfortably for many years near family and friends – why should they have to move some distance where property prices happen to be cheaper?”
“We understand the issue of right sizing and getting people in the right properties as far as possible but forcing people to downsize, particularly the most vulnerable and compromised, must be avoided.”
Propertymark has highlighted that any future changes to the current stamp duty system across England and Northern Ireland must be carefully considered, fit for future purpose, and encourage the concept of homeownership for those who aspire to it.
It says that proposals for a ‘proportional’ property tax regime must be wisely measured in alliance with key industry stakeholders and deliver a dynamic approach in terms of supporting the property ownership journey.
Any revised system must assist first-time buyers, second steppers and those looking to right size, according to Timothy Douglas, head of policy and campaigns at Propertymark.
He commented: “Discussions around reforming stamp duty are welcome because it is a significant barrier to moving and getting people on the housing ladder. What’s key is that any reforms are evidence based and support first time buyers, second steppers and those looking to right size.
“Economic growth can come from reducing the financial burden of Stamp Duty which we know increases the number of transactions, but any changes must work alongside differing property prices and the dynamic nature of our housing markets across the country.”
Reeves urged not to turn new property tax into a homeowner ‘money grab’
One things for sure like all of HMRC’s system it won’t be simple, the MTD future is a prime example.
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Please just leave the property market alone!! This will teach all those who have been crying out for stamp duty change! Labour will never abolish one tax without introducing another tax that attracts more income. Anything that is done will have a negative effect on the market for a period of time. Can you imaging being a super prime buyer right now. Thinking about the £250k in SDLT you’re about to fork out only to think that you may be taxed again on the same property. Any buyer for that matter! This is the worst idea since announcing the removal of double MIRAS. Why can’t the government just leave us alone for a while. A prosperous housing market means plenty of tax anyway.
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Bizarre ~ of course any “freebie “ for a purchaser will be redeemed by the vendor adjusting their asking price pro rata.
Larger house builders previously offering a “carrot” of free legals, stamp duty, furnishings etc absorbed within the asking price along with a time frame to secure the purchase.
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If someone is looking to sell their house at £500,000 and this tax is introduced, the sellers will merely add the tax to the asking price. This happens at the end of every stamp duty holiday now. Effectively the buyer is still paying the tax via inflated sales price rather than calling it a tax!
Why can intelligent people not see this tinpot government for what they are? They hate success, wealth, anyone who isn’t a scrounger, anyone that owns anything; their aim is to convert the country into a socialist state and then retire on their gold plated pensions!
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How will this work if you have done refurbishment works? Taking on an older, tired building and updating it, adding value yes but at a cost. If I buy for say £500K do £100K worth of work and sell for £700K will I be taxed on the £200K profit even though I have spent £100K on upgrading the property to get that value and without doing the work it would still be worth £500K ?
Surely this will be a huge disincentive to anyone to do any works to any property over £500K ?
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Sitting on a property now valued at £500,000 does not make you wealthy neither is the increase since purchasing all profit. Most of us now in our 70/80’s paid interest on our mortgages of between 8/14%. for 25 years. Labour once again call it a wealth tax but most of us are far from wealthy and living on less than £200 per week because we retired pre 2016. Many council houses built in the 60s and 70s are now worth in excess of £500,000. We have council houses here in Cornwall with a sea view valued in excess of £1.2 million. These are small terraced homes.
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