Scrap stamp duty and council tax to fix housing crisis claims think tank

A think tank has claimed that abolishing stamp duty and council tax could help tackle London’s housing crisis.

A report by Centre for London argues that reforming property taxes would improve affordability and increase fairness across the housing system.

The news comes as an industry body has also claimed that landlords play a key role in addressing the housing crisis.

Fairer and more transparent

The Centre for London findings are modelled using Land Registry data covering 2.7 million London property transactions since 1995, Valuation Office Agency (VOA) data on Council Tax dwelling stock, and Price Paid data from the UK House Price Index to estimate the current value of housing stock in London and England.

They propose a partially devolved proportional property tax applied to all privately owned residential dwellings currently liable for Council Tax, paid by owners and excluding social housing.

The think tank says a proportional property tax (PPT) replacing council tax and stamp duty would be “fairer and more transparent”.

According to the report, the PPT model would save the average London renter around £24,000 over 10 years, equivalent to over £1,890 a year, while a first-time buyer would save an average of £8,593 in their first five years.

It also claims the model would generate an additional £912m a year for social housebuilding, potentially doubling the current rate of delivery.

London’s housing system is broken

Rob Anderson, director of research at Centre for London and co-author of the report, said: “London’s housing system is broken. For millions of Londoners, an affordable home is out of reach and more people than ever are homeless.

“This is a failure of both supply and demand-side policy. We’ve failed to help the market build enough homes overall, allowed affordable housing to decline, and taxed housing in a way that increases inequality, meaning homes are less well matched to people’s needs.

“We need to both build more homes and ensure supply reaches those who need it. Property tax reform, which promotes a fairer housing market while generating desperately needed funding for social housebuilding, is the best way to do that.

“Our recommendations are a package that will make it cheaper and easier to build homes, scale up social housebuilding, and rebalance London’s housing market. Taken together, they would create a system that works better for Londoners and gives more people the chance of a secure, decent and suitable home.”

First-time buyers would no longer pay stamp duty

Stamp duty is currently paid on property purchases above certain thresholds, with first-time buyers exempt up to £300,000 and standard residential purchases up to £125,000. In the 2024 Autumn Budget, Chancellor Rachel Reeves increased the stamp duty surcharge on additional homes from 3% to 5%.

The report claims abolishing stamp duty could unlock 79,000 additional homes each year, including 24,000 three- and four-bedroom properties.

It also says first-time buyers would no longer pay stamp duty, saving an average of £8,593 in their first five years of home ownership.