The Resolution Foundation has called for stamp duty to be scrapped as part of a major overhaul of England’s property taxes. The think tank claims the tax prevents around 100,000 home purchases each year.
It wants ministers to replace council tax and stamp duty with a proportional tax based on current property values. The existing system discourages people from moving home, it argues, and places a disproportionate burden on lower-value properties.
London households underpay £3.1bn
Its Home Economics report estimates that London households effectively underpaid £3.1bn in property taxes in 2024-25, reflecting the value of their homes. By contrast, households elsewhere in England are more likely to pay disproportionately high amounts.
The report says 80% of London households currently benefit from the structure of property taxation. The North East faces a very different picture. By 2030-31, the Foundation expects 85% of households there to overpay relative to property values, with the average annual overpayment around £710.
Stamp duty blamed for lost transactions
One of the most significant recommendations concerns stamp duty. The Resolution Foundation estimates that the transaction tax prevents around 100,000 property purchases each year. It argues that stamp duty discourages people from moving, including homeowners looking to downsize and those relocating for work.
The think tank does not recommend immediately abolishing the tax. Instead, it wants ministers to reform stamp duty and council tax together. Its proposed replacement would introduce an annual tax linked to current property values, at a rate equivalent to 0.7% of a property’s current value.
The new system would remain revenue-neutral overall and would offer rebates to lower-income households. Some asset-rich but cash-poor homeowners could defer payments until they sell their property. The Foundation says ministers should leave stamp duty unchanged for the remainder of this parliament, using that period to prepare the wider reforms. Homeowners could then offset stamp duty paid during the transition against future property tax bills.
Council tax still relies on 1991 values
The report also targets council tax, which is still calculated using property valuations dating from 1991. Since then, house price growth has varied sharply across the country. The Foundation says property prices have increased 7.3-fold in Inner London since 1995, while in the North East they have risen 4.2-fold.
By 2030-31, it estimates a £100,000 home will face a much higher effective tax rate than a £1m property. Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, said: “Our housing taxes fall heaviest on those least able to afford them and have turned into a huge £3.1 billion subsidy for those living in London paid for by households across the rest of England.”
London faces further property tax increases
The report comes as parts of London face potentially steep council tax increases following changes to local government funding. Wandsworth Council says the reforms will eventually cut its funding by £84m a year. As a result, the council has warned that it may need to increase council tax sharply unless the settlement changes.
Meanwhile, owners of high-value homes face the new High Value Council Tax Surcharge, also known as the “mansion tax”. Under current policy, the government will impose an additional annual charge on homes worth more than £2m from April 2028. Charges will start at £2,500 for properties valued between £2m and £2.5m, while owners of homes worth more than £5m will pay £7,500. Several London councils are campaigning against the measure.
The Resolution Foundation wants the government to go considerably further, calling for a wider overhaul of residential property taxation. Its report recommends creating a database of up-to-date property valuations and proposes a commission on residential property taxation. Ultimately, the Foundation argues that reforming both taxes would reduce the financial penalty for moving home and that annual taxation would better reflect current property values.
