Widespread concern is building around reports that Labour is considering a major overhaul of the housing tax system, including the introduction of a new levy on higher-value homes.
According to The Guardian, Whitehall officials are exploring plans for a national property tax that could replace stamp duty on owner-occupied homes. One proposal under discussion includes imposing a new tax on properties valued over £500,000, raising fears of a broader shift in how property is taxed across the country.
The potential reforms are seen as part of a wider effort to modernise the current system, which many argue is outdated and inefficient. However, industry voices warn that any move perceived as targeting homeowners – particularly in areas with high property values – could be politically and economically risky.
Paula Higgins, founder and CEO of the HomeOwners Alliance, said: “Stamp duty is unfair, outdated and stalls the housing market. Our research shows that nearly half of homeowners considering a move say Stamp Duty puts them off, and it particularly penalises growing families and downsizers. Tinkering won’t fix it. The only solution is to scrap stamp duty completely.
“On the suggestion of introducing a new property tax there shouldn’t be a money grab by treasury at the expense of homeowners. It’s an attack on homeowners and history shows that introducing a new tax is never followed by the removal of older taxes.
“In the interim the government needs to tread carefully. Uncertainty around property taxes causes paralysis in the housing market. We’ve just seen how damaging this uncertainty can be: in April this year, when Stamp Duty thresholds changed, transactions collapsed by 64% in a single month – the sharpest fall on record. Homeowners can’t afford a repeat.”
Simon Gerrard, chairman of Martyn Gerrard Estate Agents and past president of Propertymark (NAEA) has also shared his thoughts following reports that chancellor Rachel Reeves is mulling replacing the current stamp duty regime with a new property tax.
In short, he welcomes the end of stamp duty but is concerned that the new taxes could be onerous and may lead to asking prices soaring on properties above £500,000 sellers offset losses. He is particularly concerned what the move might mean for those starting a family in London, where property prices are significantly higher than the average.
Gerrard said: “The existing stamp duty regime is unfit for purpose and has had a chilling effect on the housing market, which is why I’ve long campaigned to reform it. It’s good to see that the Government has understood some of the issues and is taking action to end the broken system. Adding further costs to purchasing a home has only reduced transactions, stifled upward mobility and prevented the efficient functioning of the housing market. This new tax would be paid by the seller, rather than the buyer which means that it won’t be the same tax on aspiration that Stamp Duty currently is.
“However, it’s clear that the government is motivated by a desire to raise revenues and I’m concerned that this new tax is going to be punishingly high. If that’s the case, you’re going to see a ceiling at the £500K threshold for that band of the market, as people avoid falling under the regime, and then a significant jump in values with nothing in between. Prices above £500K will skyrocket as sellers account for the losses caused by the tax, that used to be paid by the buyer.
“What most worries me is the effect on families in London. The housing market is far higher in London, which means any family home will be impacted by this new tax. If prices surge higher because of this new regime, how will anyone in the capital start a family? The government needs to think very carefully what the wider repercussions these changes might have and act carefully. So far many of its attempts at raising revenues through tax, such as the Stamp Duty changes earlier this year, have backfired.”
What a bunch is misguided, naive, woefully inept, out of touch, and lacking in common sense idiots.
You only have to look at very recent GDP figures against completions to see how much influence the property market has.
And now they wish to throw uncertainty in?
If you’re in the market for anything over £500k what will you do now? Once this story has national coverage, with rumours nationally the market may well come to a halt.
If you are going to do something like this, you do it. You don’t brief.
Once a government starts leaking this out everybody knows it’s because THEY aren’t sure. THEY don’t have confidence.
Once that perception hits nobody knows what to do. Including selling, or buying anything certainly over £1m where the stamp duty equates to 2-3 years of capital appreciation as a minimum.
I cannot fathom the level of stupidity with this lot…..ok, scrap that I can.
Reeves and the Treasury need replacing with the smartest 10 year olds we can find. We as a nation deserve at least that level of competence.
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Anyone any good at economics is a trader as it pays significantly more.
It’s like we are Bradford expecting to be as good as Liverpool.
Pay peanuts, get peanuts!! Nuts being the operative word
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It doesn’t seem to matter what publication you read nowadays, all contain stories and articles regarding the incompetence of the current government.
Having had 14 years to plan, people believed their lies that they had a plan. However, as soon as they got the keys to 10 and 11, it was clear that the only “plan” was to tax those who earn and give to those who do little or nothing to contribute to society.
This latest act of stupidity shows just how clueless they are living in their own little bubbles waiting for the day when they swan off with their gold plated pensions leaving carnage behind them.
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So all the people that have already paid stamp duty on their purchase will then have to pay again on their sale?! Can you imagine the fallout from any announcement in this regard? Property market gets flooded with stock whilst no one wants to buy until after they abolish SDLT and introduce the new property tax! Equity in homes reduces by 20% of the value so no one spends. VAT revenue goes through the floor as no one is buying anything. Businesses go bust reducing corporation tax, NI, PAYE Etc. Government is bankrupt! This would be catastrophic for the country.
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Now, it may well turn out that nothing changes and this story fizzles out, but are these words cause for concern?
“As the chancellor, Rachel Reeves, prepares the ground for tax rises in this autumn’s budget, senior ministers have tasked officials to study how a new “proportional” property tax could be implemented and model its impact before reporting back to ministers, who have been briefed on the proposals.”
We know what a mess the government (any government) has made when introducing any changes to SDLT in the past. Not only does Rachel Reeves need to consider the impact any new regime will have on the property market and the economy generally, but she also needs to consider how any changes will affect property professionals, including conveyancers and estate agents, and members of the public who are going through the home buying and selling process at that time.
In addition, this story is likely to soon be national news, and if it does become national news that disclosure could have an immediate (and possibly negative effect) on the property market (as Matt said) almost immediately. Why has this been announced in this airy fairy way?
When the “senior ministers” carry out their “study”, could they please talk to various groups made up of those actually at the front line of the home buying and selling process.
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Another half-*****, badly thought out idea by a government that has no clue whatsoever.
Let’s hope that this is simply an idea that has been thrown out to gauge public reaction, and public reaction shows them that this idea is a non-starter.
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Stamp duty on selling? What a load of baloney! What will they do with shared ownership then where they have to staircase and sell at 100%? Will the shared owners have to pay the stamp duty on properties over the half a million mark? As if they don’t already have enough bills to pay to sell a property.
These guys need to go back to the drawing board. The problem is not the economy, it is the people they are trying to rule and those that give ‘large donations’ to party coffers to get what they want in return . . .
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