(qlmbusinessnews.com . Fri 10th Oct, 2025) London, UK —
Will Removing Stamp Duty Spike UK Home Prices? Experts Weigh In
The discourse surrounding stamp duty is reaching a fever pitch. Kemi Badenoch's announcement at the Tory Party conference, stating that a prospective Conservative administration would eliminate it for main home purchases, was very much embraced.
Meanwhile, rumours abound that the Chancellor, Rachel Reeves, is mulling over its removal.
Eliminating stamp duty would garner favour with numerous homebuyers, including those buying their first home. It has received broad support from the property industry and various independent financial experts.
Analysts have pointed out there could be substantial repercussions of doing away with stamp duty on primary homes. This includes potential effects on buyers, sellers, and the broader UK economy.
1. Potential Increase in House Prices
The housing market has historically seen prices rise following temporary stamp duty reductions, observed distinctly post-Covid lockdowns.
While it remains to be seen if a permanent abolition would sustain a long-term price increase, demand is likely to push up asking prices.
“A significant uncertainty is whether this would translate directly into higher prices,” commented Lucian Cook, head of residential research at Savills.
This could result in first-time buyers saving on stamp duty but needing larger deposits.
“The impact of this change would likely vary across the country,” added Mr. Cook.
It's crucial to note that the Westminster government only has jurisdiction over stamp duty in England and Northern Ireland, with Scotland and Wales having their distinct land transaction taxes under the devolved governments.
2. Tax Reduction for the Wealthy
Many first-time buyers currently enjoy a stamp duty exemption for properties up to £300,000 in England and Northern Ireland.
“The key challenge for them is amassing a deposit,” stated Sarah Coles, head of personal finance at Hargreaves Lansdown.
Rightmove data indicates that 40% of homes for sale in England qualify for this exemption.
However, as stamp duty increases with property value, the bigger the home, the larger the saving if the tax were abolished. This policy would also magnify regional disparities.
In the North East of England, 76% of properties are stamp duty exempt for first-timers, compared to just 11% in London, with Rightmove figures showing that 60% of stamp duty is paid in Southern England, highlighting where the most significant benefits of abolition would occur.
3. Facilitating Home Moves
Experts argue that removing stamp duty could significantly enhance mobility for workers, buyers, sellers, and those looking to downsize.
“Homeownership is crucial for a fair and secure society, yet stamp duty has long hindered many,” claimed Paula Higgins, CEO of the Homeowners Alliance.
The Institute for Fiscal Studies (IFS) has criticised stamp duty as highly economically detrimental, noting that frequent movers and those seeking differently priced homes would especially benefit from its abolition.
However, some contend the impact of stamp duty might not be as significant as suggested, with other costs of moving possibly being more substantial.
4. Potential for Other Tax Increases
Being a considerable revenue source, stamp duty's abolition could create a fiscal void. The IFS estimated the Conservative’s policy might cost about £10.5bn to £11bn by 2029-30, although Conservative figures suggest £9bn.
How to compensate for this loss is a challenge, with options including spending cuts elsewhere or raising other taxes.
5. Consequences for Renters
While homeowners might celebrate, the scrapping of stamp duty for primary residences could narrow options for renters. The IFS indicates this might deter landlords from acquiring rental properties, inadvertently making owner-occupation more tax-advantageous compared to renting.
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