In summary:
- The government is reportedly considering replacing stamp duty with an annual property tax for homes over £500,000, paid by sellers rather than buyers
- First-time buyers and those moving up the property ladder could be affected differently depending on property values and location, with London and the Southeast likely to feel the biggest impact
- Other property taxes, including council tax reform and a potential ‘mansion tax’, are also under discussion, but nothing has been confirmed yet
Recent media reports have sparked plenty of speculation about possible changes to stamp duty and other property taxes. Nothing has been confirmed, but we’ve taken a closer look at what’s being discussed, and what it could mean for people moving home.
We’ve long supported reforms to help make moving more affordable and accessible. As our property expert Colleen Babcock explains: “Stamp duty is a huge barrier to movement, from first-time buyers to downsizers. We recently called for an increase to the zero-rate thresholds at which first-time buyers and home-movers start paying stamp duty and backed a suggestion from one of our agent partners that stamp duty should be paid over a longer time period.”
That said, everything being discussed right now is still at the proposal stage. It’s common for these kinds of stories to circulate ahead of a Budget, which is due in the Autumn, and the final details can often look quite different — or sometimes not happen at all.
If you’re in the middle of a move, or thinking about moving soon, the key thing to keep in mind is that nothing has changed yet, so it’s best to focus on your plans as they stand today.
What’s your home worth?
What the reports are saying
According to media reports, the government is said to be looking at replacing stamp duty with a proportional national property tax for homes worth over £500,000. If it happens, this would be a pretty big shift in how property taxes work.
Right now, buyers usually pay stamp duty as a one-off cost when they purchase a home, with the amount based on the property’s price.
Under the system being rumoured, sellers — rather than buyers — would pay the tax. Drawing on research from a think tank that officials are thought to be considering, the rate could be around 0.54% each year on the portion of a property’s value above £500,000, though the exact rate would be set by the government.
To put that into context, the seller of a £650,000 home might pay around £810 a year in property tax. Now, a buyer purchasing that same home would need to pay £22,500 upfront in stamp duty. The reports also suggest that second homes wouldn’t be included in this new system and would stay under the current stamp duty rules.
These potential changes are said to be on the table for this Labour parliament, meaning they could be introduced in the next few years. But it’s worth stressing that nothing has been confirmed, and a lot of important details still aren’t clear.