Kemi Badenoch’s pledge to abolish stamp duty if the Conservatives win the next General Election has attracted a mixture of optimism and cynicism.
While the stamp is seen as prohibitive to property transactions, the tax netted the government £8.6 billion between 2023 and 2024, making it a very expensive tax to cut if the Tories went ahead with such a move.
Marc von Grundherr, director of London agents Benham and Reeves, felt the Tory leader, Badenoch, was using the announcement as more of a publicity stunt than actual policy.
He said: “This is nothing but political hot air designed to win votes and there’s absolutely no chance the Conservatives would give up such a considerable tax haul, especially in these uncertain economic times.
“While the property industry may broadly support it and there’s no doubt it would help boost market sentiment, homebuyers will likely end up disappointed if they vote expecting this will ever actually happen.”
Stuart Cheetham, chief executive of the mortgage lender MPowered, similarly felt the Tories would never make such an move if they were actually in power.
He said: “As ‘rabbit out of the hat’ moments go, this was right up there. But as policies go, it’ll be an albatross if the Tories defy the odds and win the next election.
“Promising to forego billions in tax revenue is bold stuff, and one of the few privileges enjoyed by opposition parties. No party currently in office would dare give away so much revenue, given the weakness of the government’s finances.
“Scrapping stamp duty entirely would be very popular, and it would deliver a huge caffeine jolt to the sluggish property market. But there’s also a risk that it would drive up prices so fast that any savings for first-time buyers would soon be cancelled out.”
As it stands first-time buyers only pay stamp duty on purchases over £300,000, compared to £125,000 for the rest of the market.
Getting rid of the tax therefore, Cheetham argued, would only serve to remove this advantage.
Badenoch has said that the tax would only be abolished on people buying primary residences.
Tom Bill, head of UK residential research at real estate consultancy Knight Frank, agreed that scrapping stamp duty would drive up activity.
However, he noted that the Tory policy could result in the housing market grinding to a standstill ahead of the next General Election in 2029.
Bill said: “Stamp duty is the one lever politicians can pull that is guaranteed to have an immediate impact on the housing market.
“If bond markets feel confident that it has been fully costed and mortgage costs don’t spike, buyers and sellers would warmly welcome the move. It would inevitably have positive repercussions for the wider economy and increase social mobility.
“The only downside is that if the Tories are leading in the polls ahead of the next General Election, the housing market could grind to a halt.”
