Currently, homebuyers pay stamp duty. This tax applies to properties over £125,000. First-time buyers have a higher threshold of £300,000. The proposed system would replace this for primary residences. Instead, owners would pay a tax when they sell a home. This payment would only apply if the home value exceeds £500,000. The amount owed would then depend on the final sale price.
However, critics immediately slammed the idea. Simon Gerrard, a leading estate agent, spoke out. He has long campaigned for stamp duty reform. He called the proposal a “London tax.” This is because average property prices in London are very high. Rightmove data shows an average price of £666,983. Therefore, the new property levy would impact many typical city homes.
Gerrard explained his strong opposition. He said it targets ordinary people, not the wealthy. He also warned it would make starting a family harder. Furthermore, he predicted serious market distortions. He expects a price ceiling at £500,000. Sellers will try to avoid the tax threshold. Consequently, values just above this point might skyrocket.
Other voices also expressed concern. The Tony Blair Institute agreed the change is economically sensible. However, they also noted major political challenges. Advisor James Browne highlighted a key problem. Homeowners might be asset-rich but cash-poor. They could struggle to pay a large tax bill upon selling. Alternatively, the tax could discourage moving altogether.
Television presenter Kirstie Allsopp joined the criticism. She called the plan destabilizing for homeowners. She argued a home is a sanctuary, not just an asset.
Despite the backlash, some support exists. Jim O’Neill, a former advisor to Reeves, welcomed the idea. He believes genuine tax reform is necessary. He argues it can boost growth and improve fiscal accounts.
The government’s motivation seems clear. Ministers are under pressure to raise revenue. They must also keep their promise not to tax working people more. Targeting property wealth appears to be a solution. The new property levy could be implemented in this parliament. A later phase might also reform council tax. No final decisions have been made yet. A Treasury spokesperson focused on economic growth. They reiterated their commitment to low taxes for workers.
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