Property experts are urging Chancellor Rachel Reeves to abolish the “sin tax” of stamp duty in the upcoming budget and replace it with an annual property tax. The call comes as buyers hesitate ahead of the November 26 budget.
TV presenter Kirstie Allsopp, known for Channel 4 property shows, told MPs that buying a home should not be considered a sin. “You are actually punished for wanting to buy a more expensive property than the previous one, and that is wrong,” she said. Allsopp emphasized that encouraging people to move house is economically positive.
The Treasury is reportedly considering a new tax on homes worth more than £500,000 as part of a broader review of stamp duty and council tax. Other proposals include changes to capital gains tax relief on main homes and a potential “mansion tax” on high-value properties.
Taylor Wimpey, one of the UK’s largest housebuilders, recently reported a drop in sales, blaming uncertainty over budget changes for holding back potential buyers.
Other experts echoed Allsopp’s call to abolish stamp duty, which is charged on property purchases above £125,000. Kate Willis, property taxes technical officer at the Chartered Institute of Taxation, said the tax is easy to collect but distorts economic activity.
Richard Donnell, research director at property website Zoopla, noted that 40% of first-time buyers and nearly 80% in London would pay stamp duty. Their average bill is £16,000, about 3% of the property’s value. He warned that the tax traps people out of home ownership and increases pressure on the rental market.
Tim Leunig, director of economics at Public First Consulting and former adviser to several ministers, said stamp duty reduces mobility, limits job opportunities, and lowers GDP. Young people, who move more often, are most affected.
Leunig cautioned that abolishing stamp duty alone could drive up house prices, especially in London. He recommended an annual property tax for homes worth over £500,000, suggesting a 0.54% yearly levy, with a higher rate for properties over £1 million.
Discussing a possible mansion tax, Allsopp noted that levying 1% on homes above £2 million could encourage owners to keep properties just below the threshold. Leunig added that a wealth tax, rather than a property-specific levy, would be fairer for wealthy individuals.
Surveyors have reported signs of cooling across the UK housing market in October. Buyer demand, sales activity, and new instructions all fell further into negative territory, according to the Royal Institution of Chartered Surveyors.
Abolishing stamp duty and replacing it with an annual property tax could help revive the housing market, ease first-time buyer costs, and encourage mobility, experts argue. The upcoming budget will be closely watched for any changes that could reshape home buying in the UK.