Only 5% of movers and 40% of FTBs avoid stamp duty: Rightmove – Mortgage Strategy

Rightmove has urged the government to review the scope of stamp duty in next month’s budget, describing it as a “significant barrier to many people moving home”.

It comes after Conservative leader Kemi Badenoch made a surprise promise to scrap stamp duty on main residences if the party returns to power at the next election.

Rightmove property expert Colleen Babcock backed Conservative calls for the tax to be scrapped, but added that even raising the current threshold “would help some people”.

Babcock points to Rightmove data showing that only 5% of homes in England are exempt from stamp duty for people moving on to their next home, while only 40% are exempt from stamp duty for first-time buyers (see table below).

She said: “Looking ahead to November’s budget, we will be urging the government to review how stamp duty will be changed.

“Even changing the threshold will help some people, but if it’s possible to go further it would be a big step forward for liquidity across the property market.”

Currently, buyers in England and Northern Ireland need to pay stamp duty on properties worth more than £125,000, which is 2% of the home’s value, and 12% on homes worth more than £1.5 million. For first-time buyers, the threshold is £300,000.

The tax raised £11.6bn last year, according to government figures.

The homeowners union also “strongly” supports calls for tax cuts.

Home Owners Alliance chief executive Paula Higgins said: “We strongly support the Conservative leader’s call to scrap stamp duty.”

She added: “Our research shows more than 800,000 homeowners have put their plans to move on hold in the past two years, with stamp duty being a major barrier.

“By repealing it, we don’t just help first-time buyers: we free up supply, free up stock, stimulate related transactions and boost the housing market.”

But financial services firm Hargreaves Lansdown said there were “serious question marks” over what the move might “achieve and whether it is likely to happen”.

Sarah Coles, head of personal finance at Hargreaves Lansdown, points out that stamp duty is “not necessarily the biggest obstacle people face when buying or selling”.

Coles said: “For example, someone downsizes a property worth £750,000 to a property worth £300,000. In England and Northern Ireland they would pay £5,000 in stamp duty.

“This is a fraction of the estate agent fees they might pay and includes significant costs from conveyancing to relocation. This begs the question whether removing the cost of the tax would be a game changer.”

Coles added: “Meanwhile, first-time buyers will pay no stamp duty at all when buying their first property worth £300,000. The big challenge for them is raising the deposit, and one of the most valuable tools at their disposal is a Lifetime ISA, which offers a 25% government bonus on all contributions.

“It’s also important to consider the potential impact on the Treasury, where might this money come from and what other taxes might be raised?”

Chancellor Rachel Reeves faces a fiscal gap of between £20 billion and £30 billion this summer, with the Treasury imposing a series of new housing taxes ahead of the November 26 budget.

No details about the new homes levy have been revealed so far, but it is understood the Treasury is considering a new property tax on sales of homes worth more than £500,000.

Landlords could also be hit by proposals to apply national insurance to rental income, a move the Treasury hopes will raise £2 billion.

Labor is also understood to be looking at plans for a new local annual property tax to replace council tax over an unspecified phased period.

Rightmove UK stamp duty data by region: