The Treasury is considering a major overhaul of property taxes that could end stamp duty for most buyers while shifting the burden to sellers instead. Under the proposals, homeowners would pay tax when selling properties valued over £500,000, rather than buyers paying stamp duty on purchase.
The changes would represent the biggest shake-up of property taxation in decades. No final decisions have been made, and any changes would be announced at a fiscal event such as the Autumn Budget, likely in late October or early November.
London market faces biggest impact
Half of all home sales over £500,000 are in London, with a further 26 per cent in the South East, according to analysis by property company Hamptons. This concentration means the capital would bear the brunt of any new seller-focused tax.
"There is a risk that such a proposal slows down the market to a greater extent in London, the economic epicentre of the country," says Tom Bill, head of UK residential research at Knight Frank. The proposed £500,000 threshold would capture approximately 30 per cent of homes currently for sale across England.
Expert warnings on market disruption
Property experts welcome removing stamp duty's market-dampening effects but warn of significant short-term disruption. Richard Donnell, Executive Director at Zoopla, describes stamp duty as "a hugely inefficient tax that acts as a major drag on the housing market, discouraging people from moving and downsizing."
However, he cautions the proposals would bring "a lot of short-term disruption and uncertainty to the market with the risk of cliff edges appearing around any value thresholds." Nicholas Mendes from John Charcol Mortgages warns that "higher-value homes in the capital will inevitably shoulder much of the new burden" as stamp duty currently raises more than £11 billion annually.
Mixed outlook for first-time buyers
London's first-time buyers could benefit from stamp duty removal, though high property prices remain the primary barrier. The average asking price in the capital is £667,000 according to Rightmove, while first-time buyers paid an average of £483,000 in May, triggering £9,150 in stamp duty.
Will Vaughan, director at House Collective, says removing stamp duty "could help them get a foot on the ladder sooner." But Nina Harrison from Haringtons UK argues that "in London, it's sky-high prices rather than the tax bill that keep them locked out."
Seller concerns over new burden
Shifting taxation to sellers risks creating market paralysis, particularly affecting downsizing moves. Harrison warns that "downsizers -- already reluctant to leave the family home -- would be even less inclined to move if it triggered a hefty tax bill."
Vaughan agrees the policy could "kill off the very downsizing moves the market desperately needs." In areas like South West London where family houses are finite and demand is driven by school catchments, Geoff Wilford from Wilfords London warns "the risk of a logjam is very real."
Broader reform considerations
The government is also examining council tax reform as a medium-term goal to replace the current system and bolster local authority finances. Current stamp duty thresholds stand at £125,000 for general purchases and £300,000 for first-time buyers, with stamp duty on second homes remaining unchanged under the proposals.
Property experts suggest a lower, flatter rate across all transactions could increase overall revenue while reducing market distortions. As Harrison notes: "If moving became less punitive, transaction volumes would rise -- and with more people moving, the Treasury would likely raise more money, not less."
Sources used: "The Standard", "Cornwall Live", "Manchester Evening News", "Birmingham Mail", "Hamptons", "Knight Frank", "Zoopla", "Rightmove", "Office for National Statistics"
Note: This article has been edited with the help of Artificial Intelligence.
