The Government must reform stamp duty as part of a package to help first-time buyers, the Housing, Communities and Local Government (HCLG) Committee said in a report today.
This step is the most prominent call for property tax reform, and joins the calls of the Conservative Party, which pledged to reform the property tax. Eliminate the tax on principal homes if re-elected.
The cross-party committee report notes that stamp duty is a valuable source of revenue for the public finances, and recommends that the government launch a consultation, by the end of 2026, to examine potential alternatives.
The report recommends that stamp duty reform should be done alongside council tax reform, which the committee called for in a previous report on local government finance.
Florence Eshalomi, Chair of HCLG, said: “Home ownership rates in England have fallen over the past 20 years. For many people, especially for those unable to rely on the bank of mum and dad, the prospect of owning a home is little more than a pipe dream. “There is no silver bullet but the Government can implement a range of supply and demand side measures to help people get on the property ladder.
“Stamp duty reform is essential but, especially given the fiscal implications, it cannot be done in isolation or without a credible alternative.
“We urge the Department of Housing, Communities and Local Government and HM Treasury to consult on alternatives to stamp duty that can deliver long-term benefit and not a short-term fix that will only distort the housing market and exacerbate the affordability problem.”
The report indicates that there are hundreds of thousands of residential properties currently empty, many of which have been empty for many months or years. It recommends returning it to residential use to boost supply and reduce house prices.
The report recommends that the government facilitate councils’ control of empty properties in their local authorities, by clarifying the current powers of councils, and providing new options for recovering empty residential properties in the long term.
The report recommends that the government launch a stamp duty consultation before the end of 2026 on potential alternatives to the current tax.
The consultation must take into account factors including the ability to raise revenue, the impact on property market friction, progress and equity.
The committee said options could include reducing stamp duty rates, replacing them with an alternative system, adjusting them to match local property prices or updating exemptions and exemptions.
The committee report welcomes the replacement of the Lifetime ISA with a new product specifically focused on supporting home ownership but recommends that the product does not include a fixed cap on property prices which would make it unusable in some parts of the country.
Chief commercial officer Ryan Etchells said: “This morning’s report from the HCLG committee shows that there is at least an understanding within Whitehall that there is a widening gap in affordability for first-time buyers.
“Whether the government heeds advice on reforming the stamp duty system and replacing the Lifetime ISA with a more forgiving product is another question entirely.
“As the report acknowledges, the affordability of home ownership is exacerbated by dwindling housing stock, which is hampered by the issue of empty dwellings as well as lackluster housebuilding. Stamp duty reform and the LISA would go a long way in giving potential buyers a helping hand into the market.
“However, the real key to increasing affordability is creating an environment where private homebuilders can financially justify undertaking new, viable projects.”
