Recommendation 32

MHCLG and HM Treasury must begin the process of reforming Stamp Duty Land Tax to improve affordability. Before the end of the calendar year, the government should launch a consultation into potential alternatives to the current tax, which should consider factors including revenue-raising power, impact on friction in the property market, progressiveness, and fairness. Options to consider could include: a full replacement with a revenue-neutral alternative; a reduction in rates to stimulate transaction numbers; an overhaul of banding thresholds to tie more closely with local property prices and remain relevant over time; and an update to reliefs and exemptions so that they better meet the government’s goals. The reform of Stamp Duty Land Tax should be done alongside a review of other property taxes, including council tax as we previously recommended in our report on The Funding and Sustainability of Local Government Finance, to ensure a fair and consistent approach to property taxation. Importantly, all changes considered must be intended to apply for the long term, without short-term “fixes” that can exacerbate the problem by distorting market behaviour. (Recommendation, Paragraph 150) 59