UK Property News
UK Government's Stamp Duty Reforms to Boost Receipts from £8.6bn to £18.1bn by 2030
Labour's reforms to the UK's 'most damaging tax' expected to raise costs for 83% of movers by an average of £2,500
David Hannah, Group Chairman of Cornerstone Tax, points out how the government’s lack of strategic thinking has hindered the UK housing market
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Recent research has revealed that the government's stamp duty changes are projected to increase land tax receipts by £10bn by 2030, with annual revenues rising from £8.6bn to £18.1bn. Further studies from Coventry Building Society estimate that stamp duty receipts will grow by 110%, far outpacing the expected 41% rise in property transactions, driven by higher property prices and lower tax thresholds. Deemed 'the most damaging tax we have" by Paul Johnson, head of the Institute for Fiscal Studies (IFS), David Hannah, Group Chairman of Cornerstone Tax, highlights that the Autumn Budget was a missed opportunity to stimulate the UK's housing market and make sure that the government avoids destroying the housing market. Measures such as the 2% increase in the second home surcharge and future stamp duty reforms on first-time buyers by the government, will drastically hinder affordability for many Brits.
Average stamp duty bills have risen significantly in recent years, from £5,600 in 2013 to £9,037 in 2023, with Hamptons now predicting that 9 in 10 movers will now face stamp duty costs, up from just over half before the Budget. Furthermore, buyers of second homes now face additional charges averaging £6,192, while landlords and holiday home buyers will pay even higher surcharges. Additionally, Labour's decision to end relief for first-time buyers is expected to raise costs for 83% of movers by an average of £2,500, according to Zoopla.
Experts such as David Hannah warn the changes could exacerbate housing market challenges, discouraging downsizers and trapping first-time buyers in the rental market. While the Treasury benefits, rising tax burdens could hinder mobility and deter home purchases, threatening the housing market's overall health. David further warns that additional changes, such as the Labour government’s planned rollback of the temporary nil-rate stamp duty band in April 2025, are likely to cause a surge in transactions ahead of the new rates. This will likely be followed by a market slowdown. This cycle of short-term market activity and subsequent cooling highlights the continued volatility and challenges within the UK housing sector.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking. Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling. I expect stamp duty receipts to fall significantly, then to flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill.
“Furthermore, it would make sense for the new Government to suspend, or even abolish, the 3% surcharge where properties are being acquired for private rental sector investment. Removing this measure would encourage landlords to increase their holdings, rather than exit the market – reversing the decline in supply of rental homes and potentially expand it to the point where demand no longer outstrips supply.”
David Hannah, Group Chairman
