Voices: ‘Fantasy economics’: Readers warn of housing chaos if stamp duty is scrapped

Stamp duty reform is rumoured to be under consideration by chancellor Rachel Reeves ahead of the Autumn Budget.

Reports suggest the Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards a radical overhaul of stamp duty and council tax.

Meanwhile, Tory leader Kemi Badenoch really set the cat among the pigeons by pledging to scrap the tax entirely during her party’s conference last week.

But Independent readers are divided on whether the tax should be axed, with some arguing abolition is “fantasy economics” that would only drive up prices.

“When stamp duty was cut during Covid, the spike was so huge it made it even harder for first-time buyers,” one said, while another warned that any savings would just be added to deposits and fuel a crash.

Several noted it would “appeal to the very well off” but do “absolutely nothing” for renters or those already priced out of the housing market.

Alternatives being floated included new exemptions, higher thresholds, rebates to “encourage downsizing” or replacing it with a fairer levy such as a mansion tax.

Overall, there was a sense that all options carried risks – from taking money out of the economy to pushing house prices even higher by fuelling demand.

Here’s what you had to say:

We need those with financial power to bear their share

If the abolition of stamp duty is part of a package to properly tax property, then that is good, but I suspect this is merely a headline grabber with no substance.

Sure, we all hate taxes and love the benefit of the NHS, roads, dustbin collection, etc. Unfortunately, we need both, and we also need those with the assets and financial power to bear their share and not leave it just to wage earners to shoulder the burden. The UK is a rich nation, it’s just that the distribution of those riches is disproportionately spread, and that situation is worsening at pace.

SorrySurrey

Appealing to the well-off

Abolishing stamp duty is designed to appeal to the very well-off, who are likely to be seeing a big hike in stamp duty on property above £500k in value.

It would do ABSOLUTELY NOTHING to help people struggling to get on the property ladder and would also hit the private rented market, as house prices would surge and greedy landlords looking to expand their property portfolios would jack up rents to cover their increased borrowing.

The Greens undoubtedly won the Conference season with their audacious but BRILLIANT idea to extend right to buy to the private rented market and give tenants an increasing discount and first refusal when a landlord puts a rental property on the market.

If tenants don't wish to or are unable to buy, then second in line are local authorities, who could progressively rebuild their social housing stock and alleviate their huge housing waiting lists.

CanPeopleReallyBeThisStupid

Fantasy economics

There was some speculation that Reeves was considering reform of stamp duty or replacement by something else well ahead of the Tory conference, so I think the ideas thief in this case is probably Kemi Badenoch.

However, abolition without creating another tax to replace it seems like fantasy economics and a quick way to fuel house price inflation. Badenoch's announcement sounded more akin to the unfunded Tory National Insurance Contributions cut before the last election.

Tanaquil2

Stamp duty’s dual purpose

Stamp duty seems to have two purposes: a way to raise taxes – though all taxes are taxes on income, so it is disguised income tax – and a way to limit house prices (rises) by taking those taxes out of the housing market.

The latter is necessary because the housing shortage pushes up house prices, only later to collapse when rates are raised. Removing stamp duty without building more homes is asking for trouble and will not help anyone. It will just mean that the money that would have paid stamp duty will now be added to funds available for deposits and so increase house prices… ready for a crash.

much0ado

Encourage downsizing instead

If stamp duty is stopping homeowners downsizing, preventing family homes coming to market and leaving people in properties that are too big for them, all that needs to be done is tweak the tax to encourage downsizing. (Downsizing being moving to a lower square metre, fewer bedroom property, not moving from a high-value housing area to a cheaper area.) Maybe offer a percentage rebate linked to the difference in selling higher-priced property to smaller property purchase price?

Pedrobear

What are the benefits of stopping it?

When stamp duty was temporarily cut during COVID, the house price spike was so huge it made it even harder for first-time buyers to get on the market.

I'm not sure what the amazing benefits of stopping it are.

Naa27

House price inflation risk

Past stamp duty holidays led to house prices rising, meaning buyers paid much the same, were less likely to be able to get a mortgage, and had to have a larger deposit. Perhaps a more limited change to encourage downsizing, especially by the elderly.

Alexander Boris de Pfeffel Johnson

Increasing supply is the solution

Reducing or abolishing stamp duty will just push up prices. The only way to make property more affordable is to increase supply, particularly of social housing.

BeigeDave

Meaningless nonsense

Most people realise that scrapping stamp duty is fantasy economics. As such, why should Reeves be forced to respond? The Tories have no fiscal credibility, about the same as Farage, so any proposal Badenoch makes now (being so far out from an election) is nothing but childish politicking. I suspect Reeves will ignore it entirely because it's just meaningless nonsense from a politician nobody takes seriously.

Tabbers

Some of the comments have been edited for this article for brevity and clarity.

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