The Conservatives have announced plans to abolish Stamp Duty if they win the next election.
The leader of the party, Kemi Badenoch, called Stamp Duty a “bad tax” and an “unconservative tax” when speaking at the Conservative Party conference in Manchester, and said that lowering the thresholds would not be a big enough step.
Badenoch said: “The last Conservative government cut stamp duty for thousands of home buyers.”
“But now we must go further. We must free up our housing market – because a society where no one can afford to buy or move is a society where social mobility is dead.”
“The next Conservative government will abolish stamp duty on your home.”
The Tory leader said that the move would be paid for by delivering £47billion in spending cuts, including £23billion from welfare, £8billion from the civil service and £7billion from the overseas aid budget.
The policy would apply to all first residences in England purchased by UK residents, but would not be extended to additional properties or properties purchased by companies or non-UK residents. The plan would only apply to England too, as separate taxation exists in Scotland and Wales.
The Institute for Fiscal Studies said that abolishing Stamp Duty on primary residences would currently cost around £4.5billion, however, the Conservatives believe that it would cost around £9billion as a result of the “dramatic tax increase” that they believe the chancellor is planning to implement in the November budget.
Marc von Grundherr, director of Benham and Reeves, commented: “This is nothing but political hot air designed to win votes and there’s absolutely no chance the Conservatives would give up such a considerable tax haul, especially in these uncertain economic times.”
“While the property industry may broadly support it and there’s no doubt it would help boost market sentiment, homebuyers will likely end up disappointed if they vote expecting this will ever actually happen.”
Shepherd Ncube, founder and CEO of Springbok Properties, commented: “Stamp Duty is the second largest cost homebuyers must overcome when looking to climb the ladder and so, of course, any move to scrap it would bring a considerable boost.”
“In essence, it would encourage more buyers to make their move to homes suitable for their respective stages of life, and this could help to alleviate the pressure on the supply of suitable housing stock across the wider market.”
“Of course, we’re a long way from such a reality at the moment, but even today’s claims will excite many homebuyers given the potential savings that could come as a result later down the line.”
Stuart Cheetham, CEO of mortgage lender MPowered, said: “As ‘rabbit out of the hat’ moments go, this was right up there. But as policies go, it’ll be an albatross if the Tories defy the odds and win the next election.”
“Stamp Duty isn’t just the bane of housebuyers or the plaything of politicians. It generates billions for the Treasury every year. In 2023 to 2024, people buying homes paid £8.6bn of Stamp Duty straight into the government coffers – and the figure is likely to have been even higher in the latest tax year.”
“Promising to forego billions in tax revenue is bold stuff, and one of the few privileges enjoyed by opposition parties. No party currently in office would dare give away so much revenue, given the weakness of the government’s finances.”
“Scrapping Stamp Duty entirely would be very popular, and it would deliver a huge caffeine jolt to the sluggish property market. But there’s also a risk that it would drive up prices so fast that any savings for first-time buyers would soon be cancelled out.”
“In fact the total abolition of Stamp Duty would deliver the biggest tax breaks to everyone but first-time buyers. People buying a second home or very expensive properties would save the most tax. First-time buyers currently pay no Stamp Duty on properties costing less than £300,000 – and the changes would do nothing for them.”
“Kemi Badenoch’s announcement will fly when it comes to headlines, but on every other count it’s unlikely to get off the ground.”
