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Experts warn Reeves' plan to replace stamp duty will lead to higher prices: "Screams of desperation"

ended 19. August 2025

FINANCIAL experts have warned Rachel Reeves' plan to replace stamp duty with a “property tax” will just lead to higher prices, and it “screams of desperation”.

Labour is reportedly studying how a new “national property tax” can be implemented on residential homes valued at above £500k.

This local property tax could eventually replace council tax - but no decisions have been made yet and that would be more long term.

Council tax is still based on early 1990s property values.

Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, warned that it will make property prices go up.

He said: "The property market was one area of the UK economy the government hadn’t yet broken, so Labour is now working on plans to crash it. Financially, unless the property tax is ridiculously high, this will raise less money than stamp duty, as fewer homes will be affected. 

"Initially, sellers will just build this into asking prices, sending prices up. The biggest fear will be thresholds being frozen and it won’t be long before the majority of houses south of Manchester will be included in this tax. 

“Those who paid stamp duty to buy their homes, who will then pay a further tax when selling it to downsize, will be rightly frustrated. This potential fiscal overhaul smacks of desperation and a party clutching at straws.”

Craig Fish, Director at London-based Lodestone Mortgages, said there are major downsides to the scheme.

He added: "As usual Rachel is only thinking about how to earn a quick buck. The long term consequences could be far worse. It’s likely that the major downside is it would stop people selling or moving, especially in high value areas, namely the south. 

“The result is less income overall. There are many more however and if Rachel goes through with this the housing market will change forever. Just get on and build more affordable homes, reduce stamp duty for those downsizing and watch your coffers swell.”

Scott Gallacher, Director at Leicester-based Rowley Turton, said it could just be a “reshuffle of the deckchairs”.

He added: "Stamp duty is a brake on the housing market, and scrapping it would be welcome — but the devil is in the detail. 

"The property market is a key driver of consumer confidence, and with little sign of growth elsewhere, getting it moving is vital. The concern is what replaces stamp duty. 

“With the government’s finances in a dire state, a new tax on property risks being little more than a reshuffle of the deckchairs — and could end up shooting ourselves in the foot if it dampens confidence further.”

Michelle Lawson, Director at Fareham-based Lawson Financial, admitted an overhaul to stamp duty is needed - but “this is not it”. 

She added: "Everyone or nobody pays otherwise you create another division and another cliff edge, namely the £500k mark. Short-sighted tax grabs will be a disaster and will end up generating less rather than more. 

“To increase the tax coffers, Reeves needs to charge less, charge everyone and scrap or reduce the crippling Section 24 additional property tax. An ignition of the property market will spark the economy, generate jobs and further increase tax receipts.”

Chris Barry, Director at London-based Thomas Legal, agreed, adding: "Stamp duty 100% needs reform, I don’t think there is a debate to be had on that front. It was originally introduced as a tax on high value homes and now impacts most people. 

"Tax incentives throughout history have moved the market more than Brexit, war, Covid and interest rates so this has to be the answer to give the market some life. Stamp duty breaks in recent years have been shown to bring in far more by way of tax receipts through VAT and wider economic growth as market volumes shoot up. 

“It makes sense to remove stamp duty to a level that will provide a much-needed incentive for buyers. The alternative solutions are unclear but the Chancellor needs to be careful when taxing investment properties and second homes as this makes up approximately one third of the overall market and renters are already experiencing strain on rising prices.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said: "Rachel Reeves appears to be fishing around for fiscal solutions with her latest proposal on Stamp Duty. The tax has long been in need of reform, as an increasing number of properties are being drawn into its widening net. A fairer, more sustainable system is overdue. 

"Currently, stamp duty is often regarded as a significant barrier to moving, since buyers must find a large lump sum at the point of purchase. However, simply replacing it with an ongoing annual levy might ease that upfront burden, but over time it could well result in higher overall tax receipts. 

“It could be argued that the impact would fall largely on buyers of properties above £500,000, typical households that may be better placed to shoulder the cost. Even so, such a change risks deterring both purchasers and movers. The greater concern is the uncertainty it would introduce as any transition to a new regime could unsettle the market and erode buyer confidence.”

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, also said: "The taxation system around property and inheritance certainly needs careful consideration for change; however, this does have the smell of desperation to make a 'quick buck' for the government. 

“Pushing stamp duty higher has meant less tax has been collected, a classic 'more is less' fiasco. By simply reducing stamp duty levels, the government will collect more revenue, as well as boost employment in many related sectors. This proposal just screams of desperation.”

7 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
The property market was one area of the UK economy the government hadn’t yet broken, so Labour is now working on plans to crash it. Financially, unless the property tax is ridiculously high, this will raise less money than stamp duty, as fewer homes will be affected. Initially, sellers will just build this into asking prices sending prices up. The biggest fear will be thresholds being frozen and it won’t be long before the majority of houses south of Manchester will be included in this tax. Those who paid stamp duty to buy their homes, who will then pay a further tax when selling it to downsize, will be rightly frustrated. This potential fiscal overhaul smacks of desperation and a party clutching at straws.
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Editor
Craig Fish
Director at Lodestone Mortgages
As usual Rachel is only thinking about how to earn a quick buck. The long term consequences could be far worse. It’s likely that the major downside is it would stop people selling/ moving, especially in high value areas, namely the south. The result less income overall. There are many more however and if Rachel goes through with this the housing market will change forever. Just get on and build more affordable homes, reduce stamp duty for those downsizing and watch your coffers swell.
Copy

Editor
Scott Gallacher
Director at Rowley Turton
Stamp Duty is a brake on the housing market, and scrapping it would be welcome — but the devil is in the detail." The property market is a key driver of consumer confidence, and with little sign of growth elsewhere, getting it moving is vital. The concern is what replaces Stamp Duty. With the government’s finances in a dire state, a new tax on property risks being little more than a reshuffle of the deckchairs — and could end up shooting ourselves in the foot if it dampens confidence further.
Copy

Editor
Michelle Lawson
Director at Lawson Financial
While an overhaul to stamp duty is needed, this is not it. Everyone or nobody pays otherwise you create another division and another cliff edge, namely the £500k mark. Short-sighted tax grabs will be a disaster and will end up generating less rather than more. To increase the tax coffers, Reeves needs to charge less, charge everyone and scrap or reduce the crippling Section 24 additional property tax. An ignition of the property market will spark the economy, generate jobs and further increase tax receipts.
Copy

Editor
Chris Barry
Director at Thomas Legal
Stamp Duty 100% needs reform, I don’t think there is a debate to be had on that front. It was originally introduced as a tax on high value homes and now impacts most people. Tax incentives throughout history have moved the market more than Brexit, war, Covid and interest rates so this has the be the answer to give the market some life. Stamp duty breaks in recent years have been shown to bring in far more by way of tax receipts through VAT and wider economic growth as market volumes shoot up. It makes sense to remove stamp duty to a level that will provide a much-needed incentive for buyers. The alternative solutions are unclear but the Chancellor needs to be careful when taxing investment properties and second homes as this makes up approximately one third of the overall market and renters are already experiencing strain on rising prices.
Copy

Editor
David Stirling
Independent Financial Adviser at Mint Wealth Ltd
Rachel Reeves appears to be fishing around for fiscal solutions with her latest proposal on Stamp Duty. The tax has long been in need of reform, as an increasing number of properties are being drawn into its widening net. A fairer, more sustainable system is overdue. Currently, Stamp Duty is often regarded as a significant barrier to moving, since buyers must find a large lump sum at the point of purchase. However, simply replacing it with an ongoing annual levy might ease that upfront burden, but over time it could well result in higher overall tax receipts. It could be argued that the impact would fall largely on buyers of properties above £500,000, typical households that may be better placed to shoulder the cost. Even so, such a change risks deterring both purchasers and movers. The greater concern is the uncertainty it would introduce as any transition to a new regime could unsettle the market and erode buyer confidence.
Copy

Editor
Justin Moy
Managing Director at EHF Mortgages
The taxation system around property and inheritance certainly needs careful consideration for change; however, this does have the smell of desperation to make a 'quick buck' for the government. Pushing Stamp Duty higher has meant less tax has been collected, a classic 'more is less' fiasco. By simply reducing Stamp Duty levels, the government will collect more revenue, as well as boost employment in many related sectors. This proposal just screams of desperation.