Rachel Reeves told to overhaul stamp duty as MPs warn of ‘damage’ | Personal Finance | Finance
Rachel Reeves is facing fresh pressure to reform stamp duty after MPs warned the tax is hurting first-time buyers, slowing the housing market and “damaging the economy”.
A cross-party committee of MPs said the levy has become a major obstacle to home ownership and called on ministers to launch a review of alternatives as part of a wider effort to help more people get on the property ladder. The intervention piles pressure on the Chancellor as Labour attempts to revive home ownership while delivering its pledge to build 1.5 million homes during this Parliament.
In a report published on Tuesday, the Housing, Communities and Local Government Committee said stamp duty reduces the affordability of home ownership, acts as a brake on property transactions and ultimately harms economic growth.
The committee said: “Stamp Duty Land Tax reduces the affordability of home ownership, slows the property market, and ultimately damages the economy.”
MPs urged the Government to launch a consultation before the end of 2026 into possible replacements or reforms to the tax, while also examining changes to council tax.
The committee said any review should consider options including cutting stamp duty rates to stimulate housing transactions, overhauling thresholds so they better reflect local property values, updating reliefs and exemptions, or replacing the tax altogether with a revenue-neutral alternative.
Florence Eshalomi, chair of the committee, said: “Rates of home ownership in England have declined over the last 20 years.
“For many people, and especially for those unable to draw upon the bank of Mum and Dad, the prospect of owning a home is little more than a pipe dream.
“No silver bullet exists but the government can apply a range of supply and demand-side measures to help people get on the property ladder.”
She added: “Reform of stamp duty is necessary but, especially given the public finance implications, this cannot be done in isolation or without a credible alternative in place.”
The report warned that housing affordability remains one of the biggest barriers facing aspiring homeowners, with many younger people struggling to save for deposits while also facing high rents and elevated mortgage costs.
MPs said boosting housing supply would be crucial and called on ministers to publish annual housebuilding targets for the remainder of the Parliament, alongside six-monthly progress reports on efforts to increase construction rates.
The committee also highlighted the role that empty homes could play in easing housing shortages.
It noted that hundreds of thousands of residential properties are sitting vacant across England and recommended giving councils stronger powers to bring long-term empty homes back into use.
The MPs also welcomed plans to replace the Lifetime ISA with a new savings product focused on supporting home ownership, but warned against introducing a fixed property price cap that could leave buyers in more expensive parts of the country unable to benefit.
An HM Treasury spokesperson said: “First-time buyers pay no stamp duty on homes worth up to £300,000 and can claim relief on purchases up to £500,000. We’re cutting weeks off the process of buying whilst saving first-time buyers £710 on average”.
