Rumours of reforming stamp duty heat up before Budget

Chancellor Rachel Reeves may spread stamp duty payments across several years rather than in one lump sum, according to media reports.

A story by CityAM, claims the idea of staggered stamp duty payments frequently pops up at The Treasury.

While many approve of the idea of reforming stamp duty, critics argue spreading payments could push up house prices.

Stamp duty could be paid gradually through a government-backed loan

Currently, stamp duty is paid as a lump sum by homeowners upon completing the purchase of a property if the property price is above a certain threshold. From April 2025, stamp duty thresholds in England were lowered.

For first-time buyers, the exemption threshold dropped from £425,000 to £300,000, while for standard residential properties, it fell from £250,000 to £125,000.

To boost the housing market, the Chancellor is rumoured to be looking into plans to reform stamp duty, after a report by the Tony Blair Institute for Global Change (TBIGC) last year suggested that stamp duty could be paid gradually through a government-backed loan.

The report claims the loan would be written off if a person moved home during the repayment period, which the organisation set at 20 years, given that the average time people spend in a house is 26 years.

Supporters of the proposal say reforming stamp duty in this way would make people more likely to move house and could bring stamp duty closer to an annual property tax.

According to CityAM, the proposal is under discussion, with technical details on how revenue could be protected likely to be negotiated with analysts from the Office for Budget Responsibility (OBR).

However, the Treasury claim they do not comment on policy decisions before a Budget.

A Treasury spokesperson told CityAM: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”

Industry reaction

Richard Donnell, executive director at Zoopla, welcomes the rumoured proposal.

He said:“Stamp duty is a big cost for many buyers that can put them off purchasing a home. Four in five homeowners pay stamp duty, with it also hitting two in five first-time buyers. The greatest burden is on those buying in southern England where 60% of all stamp duty is paid. Reducing the barriers to people moving home is important for economic growth and to support more home building.

“Staggering the payment of stamp duty is a great proposal as it would help unlock more home moves, especially in areas with the highest home values and the biggest costs for home buyers. The real answer, long term, is to remove stamp duty all together but as a tax that generates over £10bn a year it’s a tough one to reform.”

Professor Joe Nellis, economic adviser at accountancy firm MHA, says that while the proposal is a good idea, it must be carefully planned to work in practice.

He said: “Breaking stamp duty into instalments would lower the cash needed at the point of purchase, unlocking capital and giving buyers more breathing room for deposits, moving costs, and renovations. This could boost market activity, making it easier for households to move and potentially supporting housebuilders with stronger demand.

“But the policy comes with trade-offs. The Treasury would wait longer to receive revenue, adding to near-term borrowing needs. There is also a risk of missed payments if buyers default or sell before completing their instalments. Banks could treat the recurring tax as a financial commitment, trimming the amount they are willing to lend, partly reducing the affordability boost.

“Unless housing supply rises, spreading payments could simply push prices up by encouraging more demand into a market already short on homes.

“But if implemented carefully, the reform could help unlock transactions and improve market fluidity. Poorly designed, it risks being a short-term stimulus that leaves public finances exposed.”