The Conservative Party has pledged to abolish stamp duty on primary residences across the UK if it wins the next general election.
Announcing the policy at the party’s annual conference in Manchester, leader Kemi Badenoch described stamp duty as a “bad tax” and “un-Conservative,” arguing that it discourages home ownership and slows activity in the housing market.
Party officials estimate that scrapping the levy would cost the Treasury around £9 billion annually. Badenoch said the loss in revenue would be offset by government spending cuts totalling around £50 billion by 2029.
The policy would apply solely to primary residences, excluding second homes, properties owned by companies, and purchases made by non-UK residents.
Tom Bill, head of UK residential research at Knight Frank, commented: “Stamp duty is the one lever politicians can pull that is guaranteed to have an immediate impact on the housing market. If bond markets feel confident that it has been fully costed and mortgage costs don’t spike, buyers and sellers would warmly welcome the move. It would inevitably have positive repercussions for the wider economy and increase social mobility. The only downside is that if the Tories are leading in the polls ahead of the next general election, the housing market could grind to a halt.”
Richard Donnell, executive director at Zoopla, said: "Stamp duty hits four in five homeowners and two in five first-time buyers across the country, especially southern England where 60% of all stamp duty is paid. We welcome any proposals that remove the financial barriers to moving home. More home moves would support economic growth and the ambition to build more homes."
Lucian Cook, head of residential research at Savills, commented: “The impact that abolishing stamp duty would have is largely dependent on what replaces it, given that residential property transactions currently generate £10.4bn for the Treasury. Of that sum £5.5bn comes from people’s primary homes, with £2.6bn of the remaining £4.9bn coming from the underlying rate of tax on investment second home purchases.
“If, and this is a big if, it is a simple tax giveaway, the likelihood is that the current stamp duty bill simply passes through into prices.
“On that basis, that would indicate an uplift in house prices of around 1.4% to 2.1% on average or £5,100 to £7,500 depending on exactly how it is implemented. However, given the way stamp duty works, this would be unevenly distributed across the country's housing stock with a much greater impact on high value homes, meaning London and the South East would benefit most.
“It is difficult to model what it would do to transactions, but it should free up transactions, especially among the groups that bear the biggest exposure to taxes. With the reliefs already available, it would have the least impact on first-time buyer numbers, with much bigger impacts on mortgaged home buyers and downsizers.
“The impact on investors and second homeowners will be much less, depending on whether they also benefit from a reduction in the underlying rate of tax.”
Stuart Cheetham, CEO of MPowered Mortgages, added: “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 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.”
Marc von Grundherr, director of Benham and Reeves, agreed: “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.”
