Stamp Duty Land Tax (SDLT) has long been one of the UK housing market’s most contested taxes. It raises significant revenue for the Government, but it also creates friction at exactly the point where households, developers and investors are trying to transact. In that sense, SDLT is unlike most other property taxes. It is not simply a charge on value, but a charge on movement.
That tension is now coming into sharper focus. The recent House of Commons Housing, Communities and Local Government Committee report on the Affordability of Home Ownership concluded that SDLT “reduces the affordability of home ownership, slows the property market, and ultimately damages the economy”.[1] At the same time, HM Treasury has been clear that SDLT remains an important source of revenue (having raised around £13.9 billion in 2024–25) [2], and stands firm that abolition is “not directly on the agenda”. However, that position is increasingly difficult to hold. Labour MP Andy Burnham’s recent call for the complete abolition of SDLT signals that more radical reform is gaining serious political traction.[3] With pressure building from both Westminster committees and regional leaders, the question is no longer simply whether SDLT is flawed, it is how far reform should go, and whether it can be achieved without undermining the annual revenue the tax currently generates. Volterra’s work, published late last year, suggests that smarter, targeted reform need not come at a fiscal cost at all.
SDLT has evolved into an increasingly complex tax. Thresholds, reliefs and rates have changed repeatedly over time, often in response to short-term market pressures. Temporary “stamp duty holidays” were introduced during the pandemic, where the SDLT nil-rate band was lifted to £500k (from £125k). This boosted the number of housing transactions to their highest level in over a decade.[4] Temporary SDLT interventions distort behaviour, pulling transactions forward, inflating prices and introducing unnecessary volatility into the market. In other words, SDLT policy has too often been used as a short-term lever, despite the fact that housing markets work best when households and businesses can make long-term decisions with confidence.
More broadly, because SDLT is levied on transactions rather than ongoing occupation or ownership, it discourages mobility. As people move less often, liquidity in the housing market is reduced, chains become more fragile, and potentially productive transactions simply do not happen. This environment makes it harder for households to move for work opportunities, for downsizers to release family housing back into the market, and for underused or poor-quality stock to be recycled efficiently. It also increases reliance on chains, making the entire buying and selling process more fragile.
What Volterra’s modelling shows about targeted reform
Volterra’s previous work examined a specific reform, an SDLT exemption for residential property traders. Property traders play a valuable role in improving market liquidity by purchasing homes quickly and fixing broken chains. They are fundamentally different from buy-to-let landlords or second-home purchasers. Their business model relies on resale, not on holding properties for long-term rental yield or personal use. As such, their role is transactional rather than accumulative, with a primary focus on enabling movement within the housing market. Despite this function, under the current SDLT regime, property traders are taxed at the higher rate for additional dwellings (HRAD), as applicable to all corporate bodies. This is equivalent to +5 percentage points above the standard SDLT rates. This makes trades more expensive for consumers or commercially unviable.
Our modelling found that a targeted exemption for residential property traders could have a substantial positive effect, boosting overall transactions. Our analysis indicates that a full exemption of SDLT for property traders could:
- Increase housing transactions by between 5% and 14%;
- Increase SDLT receipts by between £333m and £1.1 billion; and
- Release between 1,400 and 23,800 under-occupied homes, through facilitating downsizing.
A better SDLT debate
None of this means that all SDLT cuts are good policy. The Committee Report rightly highlights an important caveat, that broad-based SDLT reductions can simply be capitalised into higher prices, especially where supply is constrained.[5] The experience of temporary SDLT holidays is a case in point.
The current government’s position is cautious. Treasury ministers have emphasised SDLT’s fiscal importance, and there is no indication that wholesale abolition is imminent. But the political and policy context is shifting. The MHCLG Committee has now called for government to begin the process of reform, including a consultation on alternatives to the current regime. The options it highlights include:
- Adjusting thresholds and bands so they better reflect local prices and remain relevant over time;
- Reducing rates to stimulate transactions;
- Updating reliefs and exemptions to better align with policy objectives; and
- More ambitiously, considering a revenue-neutral replacement as part of a wider review of property taxation
This creates an opportunity. If the Government is serious about improving market functioning without destabilising revenues, then targeted, evidence-led SDLT reform (such as for property traders) deserves serious consideration.
The debate on SDLT should move beyond whether the tax is politically easy to cut or fiscally difficult to replace. The more useful question is where reform would deliver the greatest economic return. In a housing market defined by low mobility, fragile chains and constrained affordability, SDLT reform may be a practical route to a better-functioning system. If reform is now back on the policy agenda, the focus should be on smart reform, not headline reform. The aim should be to reduce friction where it matters most, and to do so in a way that supports both the market and the public finances.
[1] Housing, Communities and Local Government Committee, 2026. Affordability of Home Ownership
[2] HM Revenue and Customs, 2026. Annual Stamp Tax Statistics 2024 to 2025 – Commentary
[3] Retrieved from: www.tax.org.uk/andy-burnham-s-tax-agenda-early-signals-for-a-probable-premiership. Accessed July 2026
[4] HMRC, 2024. UK Stamp Tax Statistics 2023 to 2024
[5] Housing, Communities and Local Government Committee, 2026. Affordability of Home Ownership
