Government can’t deliver 1.5 million new homes as frozen Stamp Duty Land Tax thresholds constricts property market growth
The government can’t deliver 1.5 million new homes as frozen Stamp Duty Land Tax (SDLT) thresholds are constricting the property markets growth, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “The government’s ambition to deliver 1.5 million new homes during this Parliament recognises the importance of housing to economic growth and prosperity, but frozen thresholds have slowly dragged more of each transaction into higher tax bands. The average UK house price has risen by around 28% over the past decade, but the SDLT bill on a purchase at the average property price has risen by more than 100%.”
He added: “As SDLT fiscal drag is making it more expensive for people to move and therefore constricting the market’s ability to grow, policymakers should ask whether the tax system is working against their own housing ambitions. A successful property and construction market requires both confidence and mobility to enable transactions. Builders will only build if there are enough buyers to make their development projects profitable.”
Mark said: “A higher tax charge per transaction may look attractive in the short term, but if it suppresses activity, investment and mobility, it risks undermining the very market on which future tax revenues and housebuilding targets depend.”
He added: “While there have been temporary SDLT holidays over the last decade, the underlying structure of the tax has remained largely unchanged. As house prices have risen, larger parts of residential transactions have been pulled into higher rates of tax.”
Mark said: “The average UK property price increased from approximately £211,230 in May 2016 to approximately £271,295 in May 2026, an increase of around 28.4%. Over the same period, SDLT payable on a purchase at the average property price increased from £1,725 to £3,565, an increase of 106.7%.”
He added: “As SDLT is charged by reference to fixed monetary thresholds, house price growth has a disproportionate effect. A property that would once have sat largely within the lower SDLT bands is now exposed to more tax at higher rates.”
Mark said: “If SDLT thresholds had increased in line with average house price growth since 2016 they would look very different today. The nil rate threshold would be approximately £160,500 rather than £125,000. The £250,000 threshold would sit just above £321,000 and the £925,000 threshold would move to almost £1.2m.”
He added: “The difference may appear modest at lower property values, but it becomes increasingly significant as prices rise. A purchaser of a £1m property is paying almost £6,600 more SDLT than would be the case if thresholds had simply moved in line with average house prices. At £2m, the difference exceeds £24,500.”
Mark said: “Over the last decade, the SDLT payable on the average property has more than doubled, while residential transactions in England and Northern Ireland are lower than they were ten years ago. The data does not prove SDLT alone is responsible. The period has been distorted by Covid, temporary SDLT holidays, higher mortgage rates and wider affordability pressures. However, the direction of travel is difficult to ignore. A tax on movement has become more expensive and the market is not transacting at higher volumes.”