STAMP duty is another reason for stuttering house price growth, experts have said, as house prices fell for the first time in 2026 last month.
House price growth contracted by 0.6% in May, according to the Nationwide, as higher interest rates and energy prices caused by the conflict in Iran finally fed through into the figures, dragging the annual growth rate down to 1.7%, from 3% in April.
But experts say that one overlooked cause of muted house price growth, which is eroding buying power, dampening demand and limiting the transaction levels necessary for a healthy market, is Stamp Duty Land Tax (SDLT) — and they urged the Government to “revisit it”.
Thomas Boughton, Founder at London-based Artillium Real Estate Finance, said: “Stamp duty is having a greater impact on the housing market than many realise.
“Buyers, movers and investors are increasingly reconsidering purchases, with the recent reduction in first-time buyer relief from £425,000 to £300,000 adding further pressure, particularly in London.
“The conversation has shifted from “How much deposit do I need?” to “How much stamp duty will I have to pay?”.
“As brokers, we can often help clients overcome deposit challenges, but SDLT is a fixed cost that cannot be avoided. For many first-time buyers, years of saving are being eroded by tax at the point of purchase.
“If there is to be a change in political leadership, a review of SDLT should be high on the agenda. It could be the stimulus the housing market urgently needs.”
Drag
Rebecca Robertson, Director at Evolution Financial Planning, agreed: “Stamp duty has absolutely become a drag on the UK property market, especially for people who want to move but feel financially “stuck”.
“When you combine higher mortgage rates, the impact of the Renters’ Rights Act and weaker sentiment generally, stamp duty is the extra weight that tips many households from “maybe we should move” to “let’s stay put”.
“For people looking for a bigger property in particular, the jump in stamp duty can feel disproportionate.
“Families who have outgrown their homes are delaying decisions because the tax bill alone can wipe out years of savings. That naturally reduces the number of properties coming to market, which then slows activity across the whole chain.
“Is it the main cause of falling prices? No, mortgage affordability is still the biggest factor. But stamp duty is definitely amplifying the slowdown by discouraging mobility at a time when the market needs fluidity.
“Should the Government revisit it? Yes, with a more modern, flexible approach.”
Investing
Hannah Vandervennin, Director at The Mortgage Consultancy, a broker, believes that “stamp duty isn’t a tax on moving, it’s a tax on investing”.
She continued: “Whether it’s your first home, your thirtieth or one you let out, you’re committing serious money to look after something for years, and you’re taxed the moment you commit.
“If you make buying cost more, people will buy less. I see it from both sides: owner-occupiers who would move but won’t swallow the cost, and landlords thinking twice since the surcharge hit 5%.
“It bites hardest at the top, on properties valued at £1.2m and up, where the bills are biggest and upsizers simply stay put. And when nobody moves up, nobody below can move either. The whole chain seizes.”
Stagnation
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, also believes the Government should revisit SDLT as a matter of urgency.
He said: “The only thing that will get this market moving is a concession on stamp duty. Is that likely? The Government are more preoccupied with leadership challenges than getting on with the job they were elected to do.
“We need urgent action on stamp duty or, otherwise, we are going to continue having stagnation in the housing market, which will have serious knock-on effects.”
Steven Greenall, Mortgage and Protection Advisor at Dunmow-based Protect & Lend, said stamp duty disincentivises people from moving, especially upsizers.
He added: “Stamp duty in its current form is a huge consideration to that family with children looking to upsize, in particular. But what’s often an additional 5-figure cost to upsize when you consider all the other costs involved in moving is disincentivising.
“At the very least, the Government should look at elderly downsizers and exempting them from SDLT to release larger family homes onto the market.”
Bottlenecks
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, described SDLT as a stumbling block: “Stamp duty remains one of the largest stumbling blocks within the property market, especially for those who are no longer first-time buyers.
“It absolutely creates bottlenecks, not only for those looking to scale the property ladder, but also for those looking to downsize in their later years.
“Downsizers see all-important equity potentially disappear due to stamp duty. As a result, empty nesters stay in their larger homes for longer, at a time when their properties could be better suited to families in need of space and location.”
Chris Barry, Director at London-based Thomas Legal, said the tax is not just hitting domestic demand but also demand from overseas: “The incentive for people to buy or upsize has taken a battering since Labour have taken over. Reduced nil rate bands, no Help to Buy and very little thought around Government-backed mortgages.
“SDLT has steadily increased since 2016 with two rises on additional homes and a surcharge on international buyers. Those investing in the UK from abroad pay an additional 7%, which simply cannot be justified by the capital returns across many parts of the UK.”
