Convervative leader Kemi Badenoch will abolish stamp duty entirely on primary residences if the party is elected into government at the next election, she has said.
In her closing speech at the party’s annual conference, Badenoch said the housing market is not working the way it should, with stamp duty ‘the big barrier that keeps getting in the way’.
‘Abolishing stamp duty on your home is a key to unlock a fairer and more aspirational society’, the leader of the opposition told the conference. She continued:
“Scrapping stamp duty will benefit people of all ages because Conservativism must speak to all generations. The young professional, buying their first flat. The couple looking for somewhere to bring up their first baby. The growing family hunting for their forever home. The pensioner who wants somewhere a little smaller, or maybe to move nearer the grandchildren. No longer will they be punished with a tax that is a barrier to doing the right thing for them, for their family, and for society.”
The announcement has been welcomed by the property industry, but Sarah Coles, head of personal finance at financial services company Hargreaves Lansdown, said there are ‘serious questions over what it might achieve’ and whether it will happen at all.
‘Having a tax bill when you buy a home doesn’t make the process any easier, but it’s not necessarily the biggest barrier someone faces when they buy and sell’, she pointed out.
“Take someone downsizing, for instance, from a £750,000 property to a £300,000 one. In England and Northern Ireland, they’d pay £5,000 in stamp duty. It’s a fraction of what they’re likely to pay in estate agency fees, and sits along a huge range of costs from conveyancing to removals. It begs the question of whether removing the cost of the tax is a gamechanger.
“Meanwhile, a first-time buyer pays no stamp duty at all on a first property costing £300,000. For them, the enormous challenge is raising a deposit, and one of the most valuable tools at their disposal is the Lifetime ISA, offering a 25% government bonus on all contributions.”
Coles also questioned how the estimated £9 billion cost would be replaced, and what other taxes could rise as a result. ‘It’s an interesting addition to the debate, but it’s only a suggestion from an opposition party,’ she said. ‘And with just under four years to an election, it’s highly likely that things will change between now and then’.
But Paula Higgins, chief executive of the HomeOwners Alliance, said the tax is a major barrier to moving and contributed to the decision of 800,000 homeowners to postpone moving plans in the last two years.
‘We strongly support the Conservative Party Leader’s call to abolish stamp duty’, she said.
“We’ve long campaigned to scrap stamp duty for people buying a home to live in. Kemi Badenoch is right: it’s a tax that traps households, hampers mobility and suppresses market activity. Homeownership is the foundation of a fairer and more secure society – but stamp duty has denied that opportunity to too many for too long.
“By scrapping it, we don’t just help first-time buyers: we unlock supply, free up stock, stimulate related trades and get the housing market moving. This will be a real vote winner.”
Richard Sexton, commercial director of property technology company HouzeCheck agreed, calling stamp duty ‘an outdated, regressive tax that burdens anyone aiming to buy a home’.
‘Existing homeowners and potential first-time buyers should cheer to hear of its proposed removal’, he added.
“SDLT inflates the already hefty costs of purchasing a property. It unfairly punishes those who’ve saved to buy a home but now need to upsize or move for work, while also discouraging older homeowners from downsizing – even when their large homes are no longer needed. Tenants aren’t spared either – landlords offset the surcharge through higher rents. Not only does it cost a great deal of money, it is also hampers Britain’s economic efficiency by disincentivising relocation for work. I welcome its proposed abolition.”
Propertymark CEO Nathan Emerson acknowledged the negative pressure, strain and uncertainty stamp duty causes for consumers and the demand changes to the system place on the housing market.
‘Earlier this year we witnessed the direct effect of stamp duty threshold changes, with a rush to complete on transactions on the lead up to April, followed by an immediate lull in the months that followed’, he said.
“Propertymark welcomes any proposals that bring higher levels of consumer confidence and affordability, helps streamline the buying and selling process, opens additional opportunities to purchase a property for those who aspire to buy, as well as enabling and supporting people to secure a long-term permanent home that fits their needs more easily.”
