What are the consequences of stamp duty?

Stamp duty is one of the biggest obstacles to a healthy housing market because it’s effectively a tax on moving. It discourages young families from upsizing and older homeowners from downsizing, leaving many homes occupied inefficiently and reducing the number of properties coming to market. The result is lower mobility, fewer transactions and wider economic consequences for everyone connected to the housing sector. Reforming stamp duty would help unlock movement across the entire market

Stamp duty dates back to 1694, and it has no place in a modern housing market. It needs complete reform, not tinkering around the edges. Every downsizer who stays put because the bill doesn't add up is a home that never comes back onto the market, and every first-time buyer priced out by the same tax is a household locked out altogether. Stamp duty doesn't just tax moving house, it taxes staying put by punishing anyone who tries to leave. That is the real cost, it is not just what the Treasury collects, it is everything it never gets to collect because the moves it is blocking simply do not happen. Scrapping stamp duty for downsizers and first-time buyers would not be a giveaway, it would unlock the transactions, the chains, and the tax revenue further down the line that current policy is quietly strangling.

Stamp duty is a bit like airline baggage fees. You’ve already committed to the journey, chosen your destination and budgeted for the main cost, only to discover another unavoidable charge before you’re allowed to proceed.

The difference is that when someone decides not to travel, the impact is mostly personal. When someone decides not to move home because of stamp duty, the consequences ripple through the housing market. One less downsizer means one less family home becoming available, while one less family move means one less opportunity further down the chain for first-time buyers.

Stamp duty doesn’t just raise revenue; it changes behaviour. Reduce the tax on moving and more people are likely to make the move they’ve been putting off, benefiting not just those households but the wider housing market.

Stamp duty is a bad tax because it punishes people for moving home and gums up the entire housing market. Older homeowners can be deterred from downsizing because moving comes with a substantial tax bill, leaving larger family homes underoccupied while younger families struggle to upsize. That blockage ripples through every rung of the property ladder. A fairer alternative would be an annual property tax, potentially with protections or means-testing for those on lower incomes. That would remove the huge upfront penalty for moving and create a stronger incentive for people to live in properties that better suit their needs. Taxing the transaction discourages the very activity needed for a healthy housing market.

Stamp duty has become a habit the Treasury can't kick - and everyone pays for it.

First-time buyers in the South face a significant tax bill on top of deposits that are already eye-watering. Families wanting to upsize get no relief. People approaching retirement who want to downsize are raiding their pension pot to cover the stamp duty on their next home - penalised for doing exactly what the market needs them to do.

There's a geographic unfairness too. The same property costs far more in the South than the North, but that extra tax brings no additional services or benefits. You're just penalised for where you live.

We've had sellers agree a compromise price to keep a first-time buyer under the threshold - a property worth £315,000 agreed at £300,000 just to get the deal done. That's a tax distorting real property values. It needs to change.