The Conservatives made headlines recently with a bold new proposal: scrapping stamp duty on primary residences. So how would it work and what impact would that have on the housing market?

What’s Being Proposed

At the recent Conservative Party conference, Kemi Badenoch announced plans to abolish Stamp Duty Land Tax (SDLT) for people buying their main home in England and Northern Ireland. The pledge would not apply to second homes, buy-to-let properties, or purchases by non-UK residents.

The policy is estimated to cost between £4.5 billion and £9 billion a year in lost tax revenue, depending on market activity. The party says it would fund the change through wider government savings if elected.

For context, the current system charges buyers a percentage of the purchase price above certain thresholds, with higher rates on more expensive properties. Removing that tax entirely could save a buyer £15,000 on a £500,000 home and more than £40,000 on a £1 million home.

Why Scrap Stamp Duty?

The Conservatives argue that stamp duty is a “bad tax” that discourages people from moving, downsizing, or getting onto the property ladder.

High upfront costs can trap households in unsuitable homes and limit mobility, problems that hit both growing families and older downsizers. The Institute for Fiscal Studies has previously said that stamp duty “gums up” the housing market.

Politically, the move is also part of an effort to reclaim the “party of home ownership” message, appealing to first-time buyers and younger families struggling with affordability.

Possible Impacts on the Housing Market

Short-term boost. Removing stamp duty could spark a surge in demand as buyers take advantage of lower transaction costs. This might increase sales volumes and improve market confidence.

Potential price rises. Without a matching increase in housing supply, higher demand could quickly push up prices, especially in regions like London and the South East, where stamp duty savings are greatest.

Better mobility. Easier movement up and down the housing ladder could free up larger homes for families and smaller ones for first-time buyers, improving the flow of housing stock over time.

Fiscal trade-off. The Treasury would need to find billions in alternative revenue or spending cuts. Economists warn that without this balance, the policy could strain public finances.

The Bigger Picture: Housing Supply

The government’s current goal is to build 1.5 million new homes in England during this Parliament. So far, progress has lagged behind. Independent forecasts suggest completions could fall short by around 40%, with rising costs, planning delays, and labour shortages all slowing delivery.

Without a stronger supply pipeline, demand-side measures like tax cuts risk driving up prices rather than improving affordability. The missing link remains planning reform and build-out rates, not just tax relief.

Interest Rates and Market Conditions

The Bank of England’s base rate currently stands at 4%, having fallen from last year’s highs. Analysts expect gradual reductions over the next two years, possibly to around 3.5% by 2027.

Mortgage rates have eased slightly but remain elevated compared to the ultra-low levels of the past decade. This keeps affordability tight for many households, particularly first-time buyers relying on higher-LTV products.

If stamp duty were scrapped while borrowing costs remain high, the policy could soften the impact of expensive mortgages, but it wouldn’t fix the underlying affordability squeeze. That’s where having access to a whole of market mortgage broker can help buyers to find products that suit their needs.

The Autumn Budget and Property Tax Rumours

The upcoming Autumn Budget is expected to focus heavily on housing. Reports suggest the current government is weighing alternative property-tax reforms rather than full abolition of stamp duty.

Ideas under discussion include:

• Allowing buyers to spread stamp duty payments over several years;
• Replacing it with a national property tax applied annually to higher-value homes;
• Increasing capital gains tax (CGT) on property sales, possibly targeting homes worth more than £1.5 million.

These rumours have already cooled activity at the top end of the market as buyers wait for clarity.

What It Means for Buyers and Homeowners

For most people, stamp duty is one of the biggest single costs when buying a home. Removing it could make moving easier and more affordable, especially for first-time buyers and those trading up.

However, if prices rise faster than savings from the tax cut, affordability gains may quickly disappear. The true benefit depends on whether more homes are built and whether borrowing costs continue to ease.

In the short term, uncertainty over tax policy and the upcoming Budget could cause some buyers and sellers to pause decisions until the outlook becomes clearer.

Final Thoughts

The discussion around removing stamp duty is just policy discussion at this stage. Its success would depend on timing, funding, and how it interacts with other market forces like supply and interest rates.

The Conservatives have certainly created an interesting debate about how to increase social mobility in the housing market.

As always, anyone planning to buy or remortgage should consider the full picture—interest rates, supply trends, and upcoming tax changes—not just the headlines or the rumours.

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