The Treasury is believed to be weighing reforms to stamp duty that would allow buyers to spread payments over several years rather than paying a lump sum upfront, as part of pre-Budget discussions with the Office for Budget Responsibility (OBR).
CityAM reports that the proposal is understood to be under active consideration and would see stamp duty paid in regular instalments.
Proponents argue the change could ease mobility in the labour market by making it easier for people to move home, while also stimulating activity in the housing market where stamp duty is often cited as a barrier.
The idea comes as Chancellor Rachel Reeves faces a £25bn fiscal shortfall, with the OBR expected to downgrade productivity forecasts ahead of the Budget.
ANNUAL PROPERTY TAX
Deutsche Bank estimates that a 0.1 percentage point cut in growth projections could reduce expected revenues by £9bn, accounting for the bulk of Reeves’ fiscal headroom challenge.
Analysts say staggered payments would make stamp duty resemble an annual property tax. Reports suggest loans could be written off if buyers moved within 20 years, in line with the average time households remain in a property.
Any reform would be subject to OBR scrutiny to ensure revenue stability and fiscal credibility.
GREAT PROPOSAL
Richard Donnell, executive director at Zoopla, says: “Stamp duty is a big cost for many buyers that can put them off purchasing a home.
“Four in five home owners pay stamp duty, with it also hitting two in five first time buyers. The greatest burden is on those buying in southern England where 60% of all stamp duty is paid. Reducing the barriers to people moving home is important for economic growth and to support more home building.
“Staggering the payment of stamp duty is a great proposal as it would help unlock more home moves, especially in areas with the highest home values and the biggest costs for home buyers. The real answer, long term, is to remove stamp duty all together but as a tax that generates over £10bn a year it’s a tough one to reform.”
MORE BREATHING SPACE
Joe Nellis, economic adviser at MHA, the accountancy and advisory firm, said: “Breaking stamp duty into instalments would lower the cash needed at the point of purchase, unlocking capital and giving buyers more breathing room for deposits, moving costs, and renovations.
“This could boost market activity, making it easier for households to move and potentially supporting housebuilders with stronger demand.”
PAYMENT RISK
But he added: “The policy comes with trade-offs. The Treasury would wait longer to receive revenue, adding to near-term borrowing needs.
“There is also a risk of missed payments if buyers default or sell before completing their instalments. Banks could treat the recurring tax as a financial commitment, trimming the amount they are willing to lend – partly reducing the affordability boost.
“Unless housing supply rises, spreading payments could simply push prices up by encouraging more demand into a market already short on homes.
“But if implemented carefully, the reform could help unlock transactions and improve market fluidity. Poorly designed, it risks being a short-term stimulus that leaves public finances exposed.”
