MPs Call for Stamp Duty and Council Tax Reform, Warning of Revenue Impact and Market Effects

The Housing, Communities and Local Government Committee published a report calling for a full overhaul of stamp duty, stating that the tax reduces affordability, slows the property market and damages the economy. The committee recommended that the government launch a consultation on alternatives by the end of 2026, examining revenue impact, market friction, progressiveness and fairness.

The report comes ahead of threshold reductions that take effect in April 2025.

The nil-rate threshold for first-time buyers will fall from £425,000 to £300,000, while the zero-rate threshold for home movers will halve from £250,000 to £125,000. These changes have already prompted a rush of completions, especially in London and the south east. The committee said stamp duty reform must be paired with an overhaul of council tax.

It also urged the government to clarify and expand councils’ powers to recover long-term empty properties and bring them back into residential use. Florence Eshalomi, chairwoman of the committee, said rates of homeownership in England have declined over the last 20 years.

“For many people, and especially for those unable to draw upon the bank of mum and dad, the prospect of owning a home is little more than a pipe dream,” she stated.

She added that no single measure would solve the problem and that the government must pursue a range of supply and demand-side steps. The committee pressed for annual homebuilding targets covering each remaining year of the current Parliament and for bi-annual updates on measures to increase private developer output.

It welcomed plans for a new homeownership product to replace the Lifetime ISA but cautioned against a static price cap that could make the scheme unusable in high-cost areas.

5 million new homes in this Parliament is vital. She also called for councils to receive greater powers both to build homes and to return empty and under-occupied properties to use. The report noted that family support, often called the “bank of mum and dad,” now plays a significant role in first-time purchases and said more should be done to give buyers without such support an equal chance.

A Treasury spokesperson said first-time buyers already pay no stamp duty on homes up to £300,000 and can claim relief up to £500,000. The spokesperson added that the government is shortening the buying process and saving first-time buyers an average of £710.

Henry Jordan, group director of mortgages at Nationwide Building Society, said any review should examine all property taxes to create a system that makes moving easier, is more progressive and reflects ability to pay.

The committee concluded that reform of stamp duty cannot occur in isolation and must be accompanied by a credible alternative that delivers long-term benefit rather than a short-term fix.