Property tax hurdle still blocks first-time buyers

Stabilising house prices and falling mortgage rates are beginning to restore confidence among aspiring homeowners, but property tax remains a significant obstacle, Propertymark says.

The industry body says forecasts pointing to modest house price growth in 2026, combined with easing borrowing costs, suggest the housing market is moving away from recent volatility.

For first-time buyers who have struggled to gain a foothold, lower monthly repayments are making ownership look more achievable, it says.

As lenders trim rates in response to calmer market conditions, affordability is improving and helping rebuild confidence among those wanting to buy.

Propertymark tax reform

Propertymark’s chief executive, Nathan Emerson, said: “Lower mortgage rates are a positive step and will undoubtedly help many first-time buyers reassess their options.

“Combined with modest house price growth, this shows the market is finding a more sustainable footing.”

He added: “However, affordability pressures remain complex, and property tax thresholds have failed to keep pace with rising house prices and wage growth over the past decade, increasing the tax burden on buyers.

“Propertymark believes reform is needed to create a fairer, more responsive property taxation systems across the UK that reduce upfront costs, support first-time buyers, and improve market mobility.

“Alongside this, action to boost housing supply and targeted support for those struggling to save for a deposit will be essential if homeownership is to become a realistic option for more people.”

Combination of obstacles

Propertymark also says that expectations of slower, more realistic house price movement are also seen as a positive.

Rather than fuelling another house price boom, the combination of gentler growth and cheaper finance points to a more balanced market taking shape.

However, the organisation warns that cheaper mortgages alone will not resolve deeper structural problems.

High house values, elevated rents that limit saving power, sizeable deposit requirements and the slow pace of homebuilding are also obstacles.

Influenced buyers

Propertymark highlights how temporary pandemic-era property tax measures, alongside wider economic pressures, have influenced buying activity over recent years.

In 2021, 1,073,308 property transactions were completed, and by 2025, that figure had fallen to 920,052, a decline of 14.3% over four years.

During 2020 and 2021, England and Northern Ireland benefited from a significant uplift to the nil-rate band for Stamp Duty Land Tax on residential purchases.

Scotland introduced a temporary increase to the Land and Buildings Transaction Tax threshold, while Wales raised the nil-rate band for Land Transaction Tax from £180,000 to £250,000 for many transactions between July 2020 and June 2021.

Those measures reduced upfront costs for a broader range of buyers and helped sustain higher levels of activity.