A survey of over 1,000 homeowners of all age groups across England suggests the vast majority are concerned about rumoured plans to introduce a new system of property tax. Most respondents of the survey by Boon Brokers said both an annual property tax and seller-paid stamp duty would be ‘unfair and unmanageable’, and half (51%) said they would be less likely to buy a property if the changes were introduced.
The research revealed that both proposed changes have been met with strong scepticism, with homeowners expressing concerns that the reforms could unfairly impact those already under financial pressure. The concerns were particularly pronounced among retired and older working households who have already paid off their mortgages, Boon Brokers said.
Gerard Boon, managing director of Boon Brokers and the author of the research, added:
“The reforms are widely viewed as a way for the government to raise extra revenue while still honouring Labour’s promise not to increase direct taxes on working households. But the data points to a bigger question: Would a Stamp Duty Land Tax reform trigger a slowdown that leaves households with fewer options?”
Respondents were asked their opinion on two potential reforms shared by the government: shifting responsibility for stamp duty from buyer to seller, with sellers of properties over £500,000 required to pay tax based on the value of their property; and abolishing stamp duty entirely and replacing it with a 0.5% annual property tax, again levied on properties worth over £500,000 and based on property value.
When asked which method of taxing property they believed to be most fair, 42% said neither an annual property tax or seller-paid stamp duty would represent a fair taxation.
‘A main point of contention that the research highlights here is public concern of a “double taxation”, particularly among recent homeowners who have already paid SDLT on their property purchase’, Boon said.
“For these homeowners, the impact is perhaps more tangible. While complying with current SDLT regulations, recent homeowners have already paid a percentage of their property purchase. The introduction of a 0.5% annual tax would, therefore, impose an additional cost on an asset that does not generate income.”
The research also found that 44% of respondents would experience financial strain should an annual taxation be introduced, with 20% saying they simply could not afford it.
‘These statistics underline the public feeling that the implementation of either proposed taxation is likely to penalise homeowners’, Boon said.
“Whether the tax implication is shifted to the seller or whether an annual taxation is planned, those who have already climbed onto the property ladder will inevitably face additional tax and increased financial pressure.”
The concern was most prononounced amongst homeowners aged 65 and over, with 71% of the age group saying retired homeowners would be hardest hit and 66% saying an annual property tax would create financial strain.
As well as highlighting the perception that an annual property tax could pose a significant financial burden and threaten the financial security associated with homeownership, the research suggests there are broader market risks: 35% of respondents said they would be less likely to sell if sellers were required to pay a property tax, while 51% said they would be less likely to buy a higher-priced property if an annual property tax was introduced. Only 24% of respondents said they would continue as planned, regardless of the reforms.
The behavioural changes predicted by the data suggest a potential ‘mobility freeze’ within the housing market, Boon warned, with 52% of respondents aged between 25 and 64 saying they would be less likely to purhcase a higher-priced property if an annual property tax was introduced. He added:
“This is a significant finding as it indicates that the proposed reforms would unintentionally introduce barriers for the very demographic that is responsible for driving movement in the market.”
The research also explored concerns about the long-term implications of an annual property tax and the potential for future tax increases, revealing 96% of respondents were concerned an annual tax would increase significantly over time.
Boon concluded:
“Overall, the research highlights strong public opposition and widespread concern, with homeowners seeing the proposed reforms as unfair, financially challenging, and likely to disrupt both personal finances and the broader housing market.”
The research, including full results file with questions and survey analysis, can be seen at https://boonbrokers.co.uk/stamp-duty-reform-research/
