A proposal to spread stamp duty land tax payments across several years, in an effort to drive growth and boost the housing market, is among changes to property tax being considered by the Treasury ahead of Budget discussions with the Office for Budget Responsibility.
Good. Many consider stamp duty, the tax paid on the purchase of a property, to be flawed – a regressive tax that damages to the housing market by punishing activity.
Anyone who wants to move, whether to downsize, relocate for work, or expand into a home fit for a family, faces an additional cost simply for making that change because.
As a result, too many people stay put when moving would be more beneficial for them, for their families – even for the country.
REVENUE KILLER
Downsizers are deterred, which bungs up the supply of larger homes and exacerbates the housing crisis. Workers think twice before accepting jobs in new locations, with consequences for labour mobility and the wider economy.
And first-time buyers find themselves priced out of the very market that government policy is supposed to help them enter (stamp duty is paid by two in every five first-time buyers).
By acting as a brake on transactions, it reduces revenue for brokers, surveyors, conveyancers and estate agents too.
NICE LITTLE EARNER
The problem with scrapping it altogether though, is that it is a nice little earner for the Treasury. Stamp duty yielded £18.3bn in the 2024/2025 financial year.
But while levying sin taxes on cigarettes and alcohol is one thing, disincentivising older people from moving into a bungalow strikes me as another.
“Letting homebuyers pay in instalments would at least make it easier for people to move.”
Letting homebuyers pay their stamp duty bill in instalments would at least make it easier for people to move when they need to – whether to downsize, upsize, relocate for work or take their first steps on the ladder.
Inevitably, therefore, staggering stamp duty the payments would help unlock more home moves – especially in areas with the highest home values and the biggest costs for home buyers.
Lastly, while the Treasury would have to wait a little longer to receive revenue (and potentially risk the threat of missed payments rising if buyers start defaulting before completing their instalments), the proposal would create a slightly steadier flow of revenue for the Government – one that would go some way to smoothing the unpredictable levels of market activity (albeit only to a degree).
MISERABLE COMPROMISE
But it’s a pretty miserable compromise given that the sector really needs a new proportional property tax entirely.
If we are going to reform the system, surely we should be looking at a replacement for stamp duty and council tax.
A new proportional property tax. Given the obvious flaws with stamp duty, there is a strong case for the UK to consider a less regressive property tax. It would bring greater fairness to the system by ensuring liabilities reflect real property values.
But the way the government handles this is just as important as the direction of travel. Last month, it was reported that the Chancellor was considering imposing new taxes on sellers of homes over £500,000, replacing stamp duty.
And now she’s considering staggering payments.
SLOWING THE MARKET
Merely floating these ideas may well be slowing down in the housing market, hitting sales and cutting revenue.
Who is going to buy a new house now if they think they could keep tens of thousands of pounds of stamp duty payments in their back pocket for a year or two?
If you want to scrap stamp duty, by all means do so. If you want to reform stamp duty, do that instead.
But don’t moot reform just for a few column inches!
KNOCK-ON EFFECT
Flying kites for the sake of publicity harms the whole industry; brokers and agents to conveyancers and surveyors could all feel the knock-on effect.
We welcome the idea of reforming property taxes like stamp duty with a fairer, modernised system that removes a regressive and damaging tax that should never have been part of our housing market.
But change won’t be affected by merely making headline-grabbing announcements.
If the government is going to navigate these challenges effectively, it must commit to change.
The housing market is a central part of the UK economy – messing with it too much could have unforeseen unintended consequence.
