Property experts warn that stamp duty and tax barriers deterring developers and investors will undermine new homebuying schemes before they deliver
The debate over Stamp Duty Land Tax (SDLT) is not going away. Prime Minister Andy Burnham has confirmed stamp duty will not change at the upcoming autumn Budget. That decision has sharpened industry criticism of a tax regime many say actively undermines the government’s own housing ambitions.
Stephen Hemmings, partner and head of property sector at Menzies LLP, argues that demand-side schemes will achieve little alone. Unless the tax burden deterring supply is also addressed, the fundamental problem remains. For brokers advising clients on new-build purchases or investment properties, that supply constraint is the more pressing problem.
“The property sector urgently needs stability from this Budget, along with a clear signal that the Government wants to encourage investment rather than keep treating property as an easy route to tax revenues,” Hemmings said.
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A cumulative stamp duty burden
Hemmings traces the problem back fifteen years. Buy-to-let investors have faced rising income tax bills. Developers have seen corporation tax climb.
Both shifts, he argues, followed earlier rounds of SDLT and ATED changes and have compounded damage to market confidence over time.
“Buyers are also being hit by high interest rates, heavy tax burdens and rising costs,” he said. “More must be done to make homebuying a more affordable process if the Government plans to deliver its plan for 1.5 million new homes by 2029.”
That target is already under pressure. Burnham’s stamp duty freeze leaves home movers still exposed to one of the market’s most persistent cost barriers. London first-time buyers are eight times more likely to pay stamp duty than those in the North East, with 79.7% liable for the tax.
Does the Your First Home scheme do enough for new-build supply?
For Hemmings, the Your First Home scheme is a step forward for first-time buyers. But it leaves a gap he considers critical: the 5% surcharge that keeps investors in new rental homes on the sidelines.
Without parallel action on supply, the scheme risks becoming self-defeating. More buyers competing for a constrained stock of new builds pushes prices up. With them go the cost advantages the policy was designed to create.
Some brokers responding to Burnham’s stamp duty decision have called the freeze a missed opportunity. Others have gone further, describing it as a damaging signal for a market that needed clear direction.
The international investment question
Hemmings also raises concerns about signals being sent to overseas investors. Speculation around a potential Mansion Tax and a council tax surcharge on homes worth more than £2 million risks adding significant costs. At the top of the market, that uncertainty is already weighing on confidence.
For properties that have already accumulated significant inheritance tax liabilities, an annual charge on staying put becomes difficult to justify. The UK’s non-resident SDLT surcharge – currently 2% on top of all standard rates, per HMRC – sits alongside that risk. Hemmings argues this needs reviewing if the UK wants international capital to flow into city developments.
“Britain’s property market needs a proper review of its tax regime and a clear roadmap for the future,” he said. “At present, every fiscal event triggers artificial market activity as investors and businesses try to get ahead of potential tax increases.”
Brokers calling on Burnham to act boldly on stamp duty and rates have made the same point. A market perpetually braced for the next change cannot plan — and neither can the clients brokers serve.
Hemmings’ broader prescription includes rebates for redevelopers of empty or unviable properties and relief for downsizers. He believes both measures could unlock chains of transactions.
Without broader reform, the gap between housing targets and housing delivery is likely to widen. That gap means constrained stock and clients who need earlier, clearer advice on the full cost of purchase – stamp duty included.
