Stamp Duty Reform: Could a Sellers’ Tax Reshape the UK Housing Market?

Chancellor Rachel Reeves is weighing up a major shake-up of property taxation that could see Stamp Duty Land Tax (SDLT) replaced with a sellers’ tax on higher-value homes.

The proposal under review would mean that owner-occupiers selling properties worth more than £500,000 may be required to pay a national levy based on the property’s value. At the same time, council tax could be phased out and replaced with a new local property tax, shifting the way households contribute to local government funding.

A Push Towards Wealth-Based Taxation

The idea comes as the government faces mounting pressure to consider wealth-based taxes, with Deputy Prime Minister Angela Rayner among those calling for reform.

Critics of the current SDLT system argue that it has acted as a barrier to transactions, slowing mobility in the housing market and making it more expensive for buyers to move up the property ladder.

Industry Reaction

Simon Gerrard, Chairman of Martyn Gerrard Estate Agents, welcomed the government’s willingness to review the current approach:

“The existing Stamp Duty regime is unfit for purpose and has had a chilling effect on the housing market. 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 it won’t be the same tax on aspiration that stamp duty currently is.”

However, he also raised concerns that a punishingly high levy could distort the market.

Possible Market Consequences

• Price thresholds could tighten: Homes priced just above £500,000 may see weaker demand as sellers attempt to avoid the new levy.
• London could be disproportionately impacted: With average family homes already above this threshold, many households in the capital may face higher costs when selling.
• Upward price pressure: Sellers may increase asking prices to offset the tax, potentially leading to sharp jumps above the £500,000 band.

Gerrard warned:

“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 about the wider repercussions these changes might have.”

Looking Ahead

While the reform is still under consultation, it is clear that the government is searching for ways to increase tax revenues without further deterring homebuyers. However, past changes to SDLT have had unintended consequences, and property professionals are urging caution.

The Autumn Budget is expected to provide more clarity on whether this proposal will move forward and, if so, how it will be structured.

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