Prime Minister Andy Burnham is facing mounting pressure to scrap stamp duty for properties valued over £300,000, as mortgage experts call for reform ahead of the Autumn Budget. The rule currently exempts first-time buyers from stamp duty land tax (SDLT) on the first £300,000 of a property, but those purchasing above this threshold, second-steppers, and other buyers face significant costs.
Current Stamp Duty Rules and Expert Criticism
As it stands, SDLT is payable on residential property purchases. Standard rates apply: you pay no SDLT up to £300,000 if you are a first-time buyer, but beyond that, a 5% rate kicks in for the portion between £300,001 and £500,000. Those who already own another residential property pay an additional 5% on top of the normal rates. Critics argue the tax distorts the market and penalises essential movers.
Rohit Kohli, director at The Mortgage Stop, said: “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. Meanwhile, families wanting to upsize get no relief.” He added: “People approaching retirement who want to downsize are raiding their pension pot to cover the stamp duty on their next home, effectively being penalised for doing exactly what the market needs them to do.”
Distorted Property Values and Market Impact
Kohli highlighted a practical consequence: “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.” The Autumn Budget, to be delivered by Chancellor John Healey in late November, is seen as the opportunity for reform.
Jamie Elvin, director at Strive Mortgages, said: “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.”
Call for Complete Reform
Craig Fish, director at Lodestone Mortgages, said: “Stamp duty has no place in a modern housing market and needs complete reform, not tinkering around the edges.” He added: “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. 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.”
Stephen Perkins, managing director of Yellow Brick Mortgages, likened the tax to an unavoidable charge: “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.” He warned: “When someone decides not to move home because of stamp duty, the consequences ripple through the housing market. 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.”
Alternative Solutions Proposed
Samuel Mather-Holgate, managing director of Mather and Murray Financial, suggested a different approach: “Older homeowners can be deterred from downsizing because moving comes with a substantial tax bill, leaving larger family homes under-occupied while younger families struggle to upsize. A fairer alternative would be an annual property tax, potentially with protections or means-testing for those on lower incomes. Taxing the transaction discourages the very activity needed for a healthy housing market.”
The pressure on Burnham and Healey comes as the housing market faces affordability challenges across the UK. With the Autumn Budget announcement expected to address housing policy, experts urge bold changes to stimulate transactions and support first-time buyers and downsizers alike.
