Stamp Duty and Council Tax Reform – How these changes could effect you
Many agents have been hopeful that the governments proposed overhaul of the housing tax system which is set to include an new levy to replace stamp duty and council tax.
A reform of the government taxes are agreed, however the Treasury should take this opportunity to help the industry and agents want the new system to be fair, effective and suitable for customers, not to just raise more money for the government.
- Proposed government overhaul of the housing tax system
- Potential changes to Stamp Duty, Council Tax and Capital Gains Tax on properties
- The reform should aim to help first-time-buyers, home-movers and those in retirement
- There are concerns that the government will implement changes to raise more funds for the Treasury
Poorly executed tax changes risk punishing homeowners and undermining confidence in the housing market. Instead, the focus should be on creating a tax structure that supports long-term housing goals and works for everyone, including the people expected to pay these taxes.
A stamp duty reform is welcome. It is dead money in a transaction and it limits moving home, exacerbated in the South East of England by the Osborne reforms in 2014. It could make sense to change it to a tax paid for by a seller as this will help move it to those realising gains, which on the face of it makes sense and could see an increase in property transactions and spur prices on.
However, the worry is in the current market it could just become a cash grab taking more money out of the housing transaction, therefore still limiting people’s ability to move home and preventing downsizers moving through fear of triggering the taxable gain.
A reduction in the tax taken out of the transaction by the government, to encourage downsizers and greater social mobility.
The increased tax receipts for the government from increased volumes have now been proven by various recent stamp duty changes and holidays and the surge of activity they have created, most recently in April 2025.
Rebranding Council Tax is not a solution – In any event the council tax system needs revising because there are so many anomalies but the cost of doing so and the time involved would be prohibitive.
There are many issues with regard to values and type of property in the present system, such as where residents may pay relatively less than others even though their properties are now much more valuable because council tax was set at a time before gentrification or other improvements.
It is all about the optics, it is not just about introducing another tax, a separate tax would have to be consulted on, would take time to effectively put together and execute effectively, so the easiest way to increase revenue would be to raise council tax. It all depends on by how much needs to be raised and whether more structural changes take place.
Incorporating council tax as a substitute for stamp duty could work, as the Stamp Duty is only paid on moving.
We are trying to encourage growth; as a country, we want to see improved job and social mobility. Stamp duty stops that, particularly among those on the margins, such as first-time buyers, because it is such a big investment.
We can see the advantage in taking tax from people who have benefited from an increase in property values but the fear is that it is going to impact the vulnerable in particular. Those of retirement age, such as those in their late sixties, might be able to move into a flat or bungalow, should they be able to find a suitable one, with not too much of an issue. But for those more on the margins, say in their early eighties, who are not so mobile and don’t want to move out of an area where they have lived comfortably for many years near family and friends, why should they have to move some distance where property prices happen to be cheaper?
We understand the issue of right sizing and getting people in the right properties as far as possible but forcing people to downsize, particularly the most vulnerable and compromised, must be avoided.
Propertymark has highlighted that any future changes to the current Stamp Duty system across England and Northern Ireland must be carefully considered, fit for future purpose, and encourage the concept of home-ownership for those who aspire to it.
It says that proposals for a ‘proportional’ property tax regime must be wisely measured in alliance with key industry stakeholders and deliver a dynamic approach in terms of supporting the property ownership journey.
Any revised system must assist first-time buyers, second steppers and those looking to right size, according to Timothy Douglas, head of policy and campaigns at Propertymark.
He commented: “Discussions around reforming stamp duty are welcome because it is a significant barrier to moving and getting people on the housing ladder. What’s key is that any reforms are evidence based and support first time buyers, second steppers and those looking to right size.
Economic growth can come from reducing the financial burden of Stamp Duty which we know increases the number of transactions, but any changes must work alongside differing property prices and the dynamic nature of our housing markets across the country.”
