Five ways abolishing stamp duty could change the housing market

There have been lots of recent discussions about potential future changes to stamp duty. The Conservatives have claimed that if they are elected at the next election, they would abolish stamp duty for main home purchases, as announced by Kemi Badenoch at the Tory Party conference.

The idea of replacing stamp duty with a new property tax is also a possibility, with Rachel Reeves said to be considering this is an option.

History has shown that changes to stamp duty have significant effects, not only for homebuyers and sellers, but also for the wider economy.

These are some of the potential effects of abolishing stamp duty:

1. Wealthy homebuyers pay less tax

Currently, the first-time buyer threshold helps buyers of properties under £300,000 to avoid stamp duty tax. Around 40% of properties¹ on the market in England fall under the threshold but if stamp duty was scrapped, people buying higher value properties would benefit the most from the tax changes.

It is estimated that 60%¹ of all stamp duty is paid for homes in southern England, so it would provide larger tax cuts for those purchasing higher value properties, predominantly in the south.

2. House prices could rise

When the government introduced a stamp tax holiday as a recovery tactic following Covid lockdowns, there was a major impact on the housing market. House prices increased as a consequence of higher demand for buying properties, so the stamp duty was effectively passed onto house pricing.

This was a temporary situation, so it is difficult to predict whether house prices would continue to rise at the same level with a permanent stamp duty removal. For first-time buyers, even though they might not be paying stamp duty, they could require larger deposits due to higher house prices.

3. More flexibility to move

The removal of stamp duty would provide more flexibility to move home. Stamp duty is a cost that currently prevents many people from moving. Around 800,000¹ homeowners cited that they decided against moving in the previous two years largely due to stamp duty.

This includes older homeowners who would look to downsize without the added financial burden of paying stamp duty tax. When stamp duty is added to other costs such as estate agent and conveyancing fees, the total costs are proving to be a major barrier.

4. Alternative tax increases

Stamp duty is a significant source of revenue for the government, so if the tax was removed, it is highly likely that the government would introduce alternative taxes as a result. In 2024, stamp duty raised £11.6bn¹, so this gap would need to be filled elsewhere.

5. Fewer rental properties

An abolishment of stamp duty for main residences could lead to a reduction in landlords purchasing rental properties, as they would still be required to pay stamp duty. If there is a lower supply of rental properties, this could push rents up and there would be less housing options for renters.

Sources

1. https://www.bbc.co.uk/news/articles/c9v7wppzm2ro

All the information in this article is correct as of the date of publishing. The opinions expressed in this publication are those of the authors Euxton Mortgage Market. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

November 2025