Mel Stride, chair of the Treasury Committee and Shadow Chancellor, proposed an amendment that called on the government to cut public expenditure to abolish stamp duty on primary residences bought by UK residents.
This was proposed by the Conservatives at their party conference earlier this month, which was praised by some industry figures – but they said it could up house prices.
Stride said stamp duty was “one of the worst taxes in our tax system” and added that Office for Budget Responsibility (OBR) figures said a 1% increase in stamp duty would lead to a 5-7% fall in property transactions.
Abolishing stamp duty would “generate more transactions”, which in turn would “benefit more plumbers, electricians, builders, designers, estate agents, surveyors and conveyancers, and allow local economies to thrive”, he added.
“Above all, it will increase the effective supply of housing, and that means a fairer society and a stronger economy,” Stride said.
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He noted that stamp duty “gums up mobility” in the housing market, making it harder for people to move – such as borrowers looking to upsize or downsize – and made it more difficult for first-time buyers to get on the housing ladder.
On the downsizing point, Luke Evans, Shadow Parliamentary Secretary for Health and Social Care, added that research from Jackson-Stops showed that abolishing stamp duty would allow 500,000 people to downsize in the first year of abolition, which would rise to 1.4 million in the second year.
Stamp duty ‘hardly a popular tax’ but removal costly and will have unintended consequences
James Murrary, Chief Secretary to the Treasury, agreed that stamp duty was “hardly a popular tax”.
He continued: “Moving house and buying a home is a complex and often stressful process, and stamp duty must be paid at a point when most people probably feel they have enough to worry about already. If there was a cost-free way to get rid of stamp duty, I would not expect long queues of people lining up to keep it. But there is, of course, no cost-free way of doing so. Figures show that the tax raised £13.9bn in 2024-25.
“At this government’s first Budget, we made changes to stamp duty to help to give first-time buyers, and other people who are buying a home to live in, an advantage over those who are buying second, third or further homes.
“If an opposition party proposes getting rid of a tax that raises nearly £14bn a year, it needs a plan for doing so. Being a credible opposition means proposing things that could actually work. Frankly, the motion exposes the current Conservative Party’s total lack of seriousness, and its complete failure to learn any of the lessons of its time in office.”
Lucy Rigby, Economic Secretary to the Treasury, added that the motion is “proof” that the Conservatives have “learned none of the lessons of their catastrophic mini Budget or of the years of the punishing austerity that was inflicted on the people and institutions of this country, with nothing whatsoever to show for it but soaring debt, low productivity and devastated household finances”.
She agreed that stamp duty was “not a beloved tax” but was an “effective tax that raises billions of pounds annually, with those buying the most expensive properties contributing the most”.
Rigby added that stamp duty receipts were crucial for the upkeep of public services and removing it would impact the budget for “our most essential services”.
“It is the same horror show from the same old Conservatives, wildly swinging their scythe at public services without a care in the world for the consequences for our NHS, our schools and our armed forces,” she said.
Daisy Cooper, deputy leader of the Liberal Democrats, said the UK’s tax system is a “mess”, as well as “complicated and unfair”.
“Stamp duty has all the hallmarks of a bad tax. It is a transaction tax and an extra cost that stops people from moving, when they might want to move to start a family, to take up a new job or to take on caring responsibilities.
“It prevents people from getting on the housing ladder, from upsizing and sometimes from downsizing. It gums up the housing market in a country where we simply cannot afford for that to happen. It disincentivises people from moving and holds back a dynamic economy,” she said.
However, she said it raises a lot of money, so abolishing it would cost in the region of £36bn-44bn in total over the next five years.
If those cuts were to come from public expenditure, this would be equal to the whole of the Ministry of Justice, Cooper warned.
“There is a strong case for looking at reforming or scrapping stamp duty all together, alongside other property tax reforms and moving to a land value tax. Indeed, some commentators suggest that scrapping stamp duty and council tax together and phasing in a land value tax over time could be one way to move ahead,” she said.
Cooper said changing one tax in isolation would create “knock-on negative effects”, and this could put homeownership further out of reach. She pointed to the rise in house prices following the temporary stamp duty holiday in 2020 and 2021.
The amendment did not pass, with 103 MPs voting aye and 326 MPs voting no.
