Reforming Property Taxation: Unlocking the Housing Market and Driving Economic Growth

By Carl Eastwood of Eastwood Property Consulting

Britain’s housing market should be an engine of economic growth, not a system that penalises people for moving home. Abolishing Stamp Duty could unlock millions of pounds, stimulate businesses across the country and help create a more dynamic and prosperous economy.

A housing market held back by taxation

The UK housing market is one of the foundation stones of our economy. It supports millions of jobs, underpins household wealth and generates business for an enormous range of industries, from construction and financial services to retail, manufacturing and professional services. Yet successive governments have presided over a property tax system that places significant financial obstacles in the way of people who want to move. Older homeowners are discouraged from downsizing, younger buyers face additional costs when trying to get onto the property ladder, and families can find themselves remaining in properties that no longer meet their needs. Surely it is time to question whether our taxation system is working in the best interests of the country, or whether it has become an obstacle to the very economic activity Britain needs to encourage?

At the centre of this debate is Stamp Duty Land Tax (SDLT), a tax that can make moving home considerably more expensive and, in some circumstances, financially unattractive. Although Stamp Duty is not the only reason the housing market struggles, it adds a substantial cost at precisely the moment when buyers are already having to find deposits, arrange mortgages and pay legal fees and other purchase expenses. At Eastwood Property Consulting, we believe the Government needs to take a fresh approach and recognise that a more active housing market could deliver significant benefits for the wider economy. Our proposal is straightforward: abolish Stamp Duty on residential property transactions. If the Government cannot commit to abolition, it should at least reduce the tax to a flat rate of 1% across the board. This should be accompanied by sensible Council Tax reform that improves fairness without simply increasing the overall burden on households.

1. Older homeowners: Why should downsizing be penalised?

For many older homeowners, their property represents their largest financial asset. After decades of mortgage payments, hard work and financial commitment, they may have accumulated substantial wealth in their homes. However, property wealth is not the same as having money readily available to spend, and this is particularly important for people approaching or already enjoying retirement. Consider a retired couple living in a four-bedroom family house. Their children have moved away, the maintenance has become increasingly burdensome and they would perhaps prefer a smaller property closer to family, friends and local amenities. Downsizing could release valuable capital to support their retirement, reduce household expenses and improve their quality of life. It could also make their existing family home available to a younger household that genuinely needs the additional space.

Yet the financial cost of purchasing another property, including Stamp Duty where applicable, can significantly undermine the benefits of moving. For people living on fixed retirement incomes, the prospect of paying thousands of pounds in additional tax can be a powerful disincentive, particularly when they are already facing legal fees, removal expenses and the costs of setting up another home. Some will simply decide to stay where they are, even when moving might make considerable financial and practical sense. Of course, taxation is not the only reason older people remain in their homes; emotional attachment, access to care and a shortage of suitable smaller properties also play a part. Nevertheless, why should the tax system create yet another obstacle? People should be free to make sensible decisions about their homes and retirement without facing an unnecessary financial penalty simply because they want to move.

2. Younger buyers: Making homeownership more accessible

The problem is equally significant for younger generations trying to purchase their first home. Saving for a deposit can take years, particularly when rent, living costs and the general pressures on household finances make it increasingly difficult to put money aside. Buyers must demonstrate that they can afford a mortgage, accumulate sufficient savings and then find additional money to cover legal fees, surveys, removals and other purchase expenses. Although first-time buyer relief exists, it does not eliminate Stamp Duty for everyone. For those who do have to pay it, the additional expense can make an already challenging purchase considerably more difficult and, in some cases, may be the difference between completing a transaction and remaining in rented accommodation.

Every additional pound required to cover purchase costs is money that cannot be retained as an emergency reserve, used towards essential repairs or spent improving the property. Abolishing Stamp Duty would not solve the wider housing affordability crisis, and we should not pretend that it would. House prices, mortgage rates, wages and the supply of new homes remain fundamental issues. However, removing this particular tax would eliminate one direct financial obstacle and leave buyers with more money available to put towards their new home. At a time when the Government should be looking for practical ways to help younger people achieve homeownership, surely it makes little sense to maintain a tax that adds to the financial pressures of buying.

3. The wider economic opportunity: More than a property sale

This is where the argument for reform becomes particularly compelling. A property transaction creates economic activity across a remarkable range of businesses and professions. When somebody moves home, estate agents earn commission, solicitors undertake conveyancing, surveyors carry out inspections and mortgage brokers arrange finance. Removal companies are employed, furniture retailers sell products, and builders, electricians, plumbers, carpenters and decorators may be commissioned to improve the new property. Homeowners frequently purchase kitchens, bathrooms, carpets, appliances, paint, tools and building materials, providing additional business for local hardware shops, DIY outlets and builders’ merchants. These businesses employ people, pay suppliers, invest in their operations and generate taxable income.

Consider what happens when a family decides not to move because the cost of Stamp Duty makes the transaction unattractive. The estate agent may lose a commission, the solicitor may miss out on conveyancing work and the removal company loses a booking. The family may postpone renovating their existing home or purchasing furniture and appliances for a new one. Some of this expenditure may simply be delayed or redirected elsewhere, but it is reasonable to ask whether a tax that discourages property transactions also suppresses wider economic activity. We should not judge Stamp Duty solely by the revenue it collects; we should also consider the economic activity that a more mobile housing market could unlock. The potential beneficiaries extend well beyond estate agents and property owners to include local businesses, tradespeople, manufacturers, retailers and professional services firms throughout the country.

A more active housing market could therefore have benefits that reach far beyond the property sector itself. Increased transactions could generate additional demand for building work, household goods, professional services and financial products, while creating opportunities for businesses to expand and employ more people. It could also make it easier for individuals and families to relocate for employment and move into properties better suited to their changing circumstances. The scale of these potential benefits deserves serious investigation, particularly when the Government is looking for ways to stimulate economic growth and improve the country’s financial position.

4. The Treasury: Revenue today or growth tomorrow?

The Government will understandably point to the revenue Stamp Duty generates. HMRC recorded approximately £15.2 billion in Stamp Duty Land Tax receipts in the 2025–26 financial year, a substantial sum, although this includes non-residential as well as residential transactions. Abolishing residential Stamp Duty would therefore have a fiscal cost, and the Treasury would need to consider how that loss of revenue should be managed. However, the debate should not end with the immediate loss of tax receipts. If reform stimulated additional housing transactions and associated spending, the resulting economic activity could generate additional VAT, income tax, National Insurance contributions and corporation tax. More business for builders, retailers, professional services firms and other companies could support employment, earnings and investment, all of which have consequences for the public finances.

The crucial question is how much additional economic activity abolition would generate and how much of the resulting tax revenue would be genuinely additional. It would be wrong to claim that Stamp Duty abolition would automatically pay for itself, as some transactions would have taken place anyway and not all additional spending would translate into new tax receipts. Nevertheless, the Government should commission an independent economic assessment comparing the likely effects of abolition, a flat 1% rate and other reform options. That assessment should examine transaction volumes, consumer spending, employment, business activity and the wider public finances. The case for reform should be judged on the overall economic consequences, not simply on the amount of tax collected at the point of purchase. It is entirely reasonable to ask whether the Treasury might ultimately benefit from a more active housing market, even if it means accepting lower receipts from one particular tax.

5. Abolish Stamp Duty — or reduce it to 1%

Our preferred option is to abolish Stamp Duty on residential property purchases. This would remove a major transaction cost and send a clear message that the Government wants to encourage a more dynamic housing market. If immediate abolition is considered impractical, however, a flat rate of 1% would be a meaningful alternative. It would simplify the system, reduce the financial burden on many buyers and make the cost of purchasing a property considerably easier to understand. For illustration, a £300,000 purchase would attract £3,000 in Stamp Duty at a flat 1%. Under the standard residential rates currently applicable in England and Northern Ireland, the same purchase would attract £5,000, assuming the buyer is not eligible for relief and no additional surcharge applies. That would leave the buyer with £2,000 more to put towards the purchase, essential repairs, furnishings or savings.

A flat rate would not remove every disincentive to moving, but it would reduce the tax burden for many buyers and represent a substantial improvement on the current system. Importantly, the case for reform is not confined to property professionals or campaigners. Parliament’s Housing, Communities and Local Government Committee has itself recommended consultation on alternatives to Stamp Duty, including reducing rates to stimulate transaction numbers. There is therefore an opportunity for the Government to consider a more rational approach that recognises the importance of housing market mobility. The question is no longer simply whether reform deserves consideration, but whether the Government has the ambition to pursue it.

6. Council Tax needs reform — but not another tax increase

Stamp Duty is only part of the problem. Council Tax also deserves a fundamental review. In England, Council Tax bands are still based on estimated property values in April 1991, while in Wales the valuation date is April 2003. The housing market has changed enormously since those dates, raising legitimate questions about fairness and whether the existing system reflects modern property values and circumstances. Council Tax should be reviewed, but reform must not become another opportunity to increase the overall tax burden on households. Any revised system should be transparent, affordable and carefully designed to protect people on modest incomes, including pensioners whose wealth may be tied up in their homes but who have limited disposable income.

The Government should examine the merits of updated valuations, revised bands and alternative approaches, publishing clear evidence about who would pay more and who would pay less. Any changes should be introduced carefully, with appropriate protections against sudden and unaffordable increases. The objective should be to create a fairer and more transparent system that supports local services without simply transferring costs between households or raising additional revenue by stealth. Property tax reform should be about improving the way the housing market and taxation system work together, not using one reform as an excuse to impose additional financial pressure on homeowners.

7. The Government must find the courage to act

Britain needs a housing market that works for its people and supports economic growth. Abolishing Stamp Duty would not solve every problem, and we would still need to build more homes, improve affordability and address the wider constraints facing the property market. But removing a significant tax on moving would be a meaningful step towards a more flexible and efficient system. Older homeowners could make retirement decisions without this particular financial obstacle, younger buyers would face lower purchase costs, and families could move when their circumstances change. Businesses across the country could benefit from additional transactions and the spending that often accompanies them.

The Government should assess these potential benefits alongside the immediate fiscal cost and make its decisions on the basis of proper economic evidence. At Eastwood Property Consulting, we believe the case for reform is compelling. Our message is clear: abolish Stamp Duty on residential property transactions. If abolition is not immediately achievable, reduce it to a flat rate of 1%. Reform Council Tax fairly, without using the process to impose stealth increases.

The housing market is far more than a convenient source of tax revenue. It is a major economic asset with the potential to support businesses, employment, investment and growth throughout Britain. The Government should stop viewing the housing market simply as a source of taxation and start recognising it for what it really is: one of the greatest potential engines of economic growth available to the country. Unlock it, and the benefits could extend far beyond bricks and mortar. It is time for the Government to recognise that potential and act accordingly.

Sources and Further Reading

1. HM Revenue & Customs (HMRC) — HMRC Tax Receipts and National Insurance Contributions for the UK: Annual Bulletin. Official figures on tax receipts, including Stamp Duty Land Tax.
2. House of Commons Housing, Communities and Local Government Committee — Affordability of Home Ownership, published 9 June 2026. Includes recommendations for consulting on Stamp Duty reform and considering alternatives to the current system.
3. HM Revenue & Customs (HMRC) — Annual Stamp Tax Statistics. Official statistics covering stamp taxes, including Stamp Duty Land Tax in England and Northern Ireland.