A cross-party committee of MPs has called for a review of stamp duty, warning that the tax is damaging the economy by hampering first-time buyers and stalling the housing market.
Rachel Reeves is facing mounting pressure to overhaul stamp duty after MPs warned the levy has become a significant barrier to home ownership. The Housing, Communities and Local Government Committee urged ministers to launch a consultation on alternatives as part of a broader push to help more people get onto the property ladder.
Stamp Duty Undermines Affordability
In a report released on Tuesday, the committee declared that Stamp Duty Land Tax reduces the affordability of home ownership, acts as a drag on property transactions, and ultimately hinders economic growth. The committee stated: "Stamp Duty Land Tax reduces the affordability of home ownership, slows the property market, and ultimately damages the economy."
MPs called on the Government to launch a consultation before the end of 2026 into possible replacements or reforms to the tax, while also scrutinising changes to council tax. The committee said any review should weigh up options including reducing stamp duty rates to boost housing transactions, revamping thresholds to better reflect local property values, updating reliefs and exemptions, or scrapping the tax entirely in favour of a revenue-neutral alternative.
Home Ownership Decline
Florence Eshalomi, chair of the committee, said: "Rates of home ownership 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 added: "No silver bullet exists but the government can apply a range of supply and demand-side measures to help people get on the property ladder."
She also noted: "Reform of stamp duty is necessary but, especially given the public finance implications, this cannot be done in isolation or without a credible alternative in place."
Housing Affordability Challenges
The report cautioned that housing affordability remains one of the greatest obstacles confronting aspiring homeowners, with many younger people struggling to save for deposits while simultaneously contending with steep rents and high mortgage costs. MPs stressed that increasing housing supply would be vital and urged ministers to publish annual housebuilding targets for the remainder of the Parliament, alongside six-monthly progress updates on efforts to ramp up construction rates.
The committee also drew attention to the contribution that vacant properties could make in alleviating the housing shortage. It noted that hundreds of thousands of residential properties are sitting vacant across England and recommended granting councils greater powers to return long-term empty homes to use.
Support for New Savings Product
The MPs also expressed support for proposals to replace the Lifetime ISA with a new savings product aimed at bolstering homeownership, but cautioned against implementing a fixed property price cap that could leave buyers in pricier areas at a disadvantage.
An HM Treasury spokesperson said: "First-time buyers pay no stamp duty on homes worth up to £300,000 and can claim relief on purchases up to £500,000. We're cutting weeks off the process of buying whilst saving first-time buyers £710 on average."
