In summary:
- The government is reportedly considering replacing stamp duty with an annual property tax for homes over £500,000, paid by sellers rather than buyers
- First-time buyers and those moving up the property ladder could be affected differently depending on property values and location, with London and the South East likely to feel the biggest impact
- Other property taxes, including council tax reform and a potential ‘mansion tax’, are also under discussion, but nothing has been confirmed yet
Recent media reports have sparked plenty of speculation about possible changes to stamp duty and other property taxes. Nothing has been confirmed, but we’ve taken a closer look at what’s being discussed, and what it could mean for people moving home.
We’ve long supported reforms to help make moving more affordable and accessible. As our property expert Colleen Babcock explains: “Stamp duty is a huge barrier to movement, from first-time buyers to downsizers. We recently called for an increase to the zero-rate thresholds at which first-time buyers and home-movers start paying stamp duty, and backed a suggestion from one of our agent partners that stamp duty should be paid over a longer time period.”
That said, everything being discussed right now is still at the proposal stage. It’s common for these kinds of stories to circulate ahead of a Budget, which is due in the Autumn, and the final details can often look quite different — or sometimes not happen at all.
If you’re in the middle of a move, or thinking about moving soon, the key thing to keep in mind is that nothing has changed yet, so it’s best to focus on your plans as they stand today.
What the reports are saying
According to media reports, the government is said to be looking at replacing stamp duty with a proportional national property tax for homes worth over £500,000. If it happens, this would be a pretty big shift in how property taxes work.
Right now, buyers usually pay stamp duty as a one-off cost when they purchase a home, with the amount based on the property’s price.
Under the system being rumoured, sellers — rather than buyers — would pay the tax. Drawing on research from a think tank that officials are thought to be considering, the rate could be around 0.54% each year on the portion of a property’s value above £500,000, though the exact rate would be set by the government.
To put that into context, the seller of a £650,000 home might pay around £810 a year in property tax. At the moment, a buyer purchasing that same home would need to pay £22,500 upfront in stamp duty. The reports also suggest that second homes wouldn’t be included in this new system and would stay under the current stamp duty rules.
These potential changes are said to be on the table for this Labour parliament, meaning they could be introduced in the next few years. But it’s worth stressing that nothing has been confirmed, and a lot of important details still aren’t clear.
What could this mean for different types of movers?
The potential impact of these changes would depend a lot on where you live and the type of move you’re making.
For first-time buyers, shifting the stamp duty payment to sellers could make things easier by removing the big upfront cost that often gets in the way of getting on the ladder. That said, sellers may build these charges into their asking prices, so deposits could still end up being higher, even if the overall cost is less than today’s stamp duty bill.
It’s still unclear whether downsizers would get an exemption, but under the current proposals, even people moving to a cheaper home could lose out if the tax is based on the property they’re selling.
And the differences between regions would be stark. Our data shows 59% of homes for sale in London are over £500,000, compared with just 8% in the North East. In the South East, 39% of homes sit above that line, while in Yorkshire and the Humber it’s only 13%. That means London and much of the South would feel the impact of the changes more strongly than other regions.
Renters might also be affected in surprising ways. Lower upfront costs could make it easier for some people to buy their first homes, but if asking prices rise, bigger deposits may still be needed. And for some homeowners hovering around the £500,000 mark, renting out their properties instead of selling could feel like the safer option while things are uncertain — which might give rental supply a short-term boost.
What other changes to property tax are being talked about?
The speculation isn’t just about stamp duty. There are also reports that the government could be looking at replacing council tax with a new local property tax. The idea being floated is a 0.44% annual charge on property values between £80,000 and £500,000, with homeowners paying at least £800 a year, capped at around £2,200 for properties worth £500,000.
A big change here is that the bill would fall to property owners rather than the people living in the home, which would be a major shift from how council tax works now. Any council tax reform is expected to take longer to come in than changes to stamp duty, and would almost certainly need a second Labour parliament to go ahead.
There’s also talk of a possible ‘mansion tax’ for homes worth more than £1.5 million. Under this plan, sellers would lose private residence relief and instead pay capital gains tax on any increase in the property’s value — 24% for higher-rate taxpayers and 18% for basic-rate taxpayers.
Our data shows this would mainly affect London, where around 11% of homes for sale are priced above £1.5 million, compared with just 1.6% outside the capital.
As Colleen adds: “In essence, this would mostly hit the most expensive areas of London and the South East. The London market is already feeling the effects of taxation more than other regions, and this could put off some high-end moves. While only a small proportion of homes are in this price bracket, when combined with the potential stamp duty changes, it could feel like a double whammy for the capital.”
What’s Rightmove’s position?
We’re in favour of any changes that make it easier for people to buy a home and move when they need to.
That said, we’ll need to see the full details — including the exact rates and how they’d work — before it’s clear exactly how the changes could affect movers.
For now, nothing has changed. If you’re in the middle of planning a move, it’s best to carry on as normal. These are still just proposals at this stage, and it’s not worth letting the speculation get in the way of your plans. We’ll keep a close eye on the situation and share updates as soon as we know more. Sign up for a My Rightmove account to get the latest housing market news straight to your inbox.
