Zoopla’s executive director has proposed raising the 5% stamp duty threshold to £500,000, a move that would reduce transaction costs by up to £12,500 for property buyers in southern England. Richard Donnell, Executive Director at Zoopla, argues the current threshold structure disproportionately affects average-priced homes across the south of England, where stamp duty can represent between 3% and 5% of a property’s value. Donnell highlighted that the 5% tax band applies to a wide range of homes, including those priced well below the luxury market, yet the financial impact is often overlooked in policy discussions focused on high-end properties.
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Under current regulations, buyers pay 5% stamp duty on the portion of a property’s value between £250,001 and £925,000. For a £600,000 property, stamp duty amounts to £20,000, whilst a £500,000 purchase incurs £12,500 in duty before additional costs such as solicitor fees. This structure creates a steep financial hurdle for buyers in regions where property prices have risen significantly since the threshold was set in 2018, yet the tax system has not evolved in tandem. Donnell emphasized that the current model fails to account for the broader economic context, including the rising cost of living and the stagnation of wages in many parts of the UK. He noted that the tax’s disproportionate effect on middle-market buyers is exacerbated by the lack of alternative mechanisms to ease housing affordability, which has become a critical issue in both urban and suburban markets.
“The 5% stamp duty band between £250,000 and £925,000 hits a lot of average buyers of average-priced homes across southern England,” Donnell said. “These people aren’t buying million-pound homes, but the numbers add up and are a disincentive to move.” This sentiment is echoed by industry experts who argue that the tax’s impact on mobility extends beyond individual buyers to the broader economy. The proposal comes as property reform campaigns gain momentum across England and Wales. Last week, the Conservative Party reiterated its pledge to abolish stamp duty entirely if returned to power, with Shadow Chancellor Sir Mel Stride claiming the move could boost housebuilding by 25%, equivalent to 200,000 homes over five years. This pledge shows a growing political consensus that stamp duty reform is essential to addressing the UK’s housing crisis, though the debate remains polarized between complete abolition and targeted adjustments.
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Jeremy Leaf, a London estate agent and former RICS Residential chairman, acknowledged stamp duty’s effectiveness as a revenue generator but questioned its broader economic impact. “The way the tax is levied means it has become a burden on job and social mobility, compromising economic efficiency and reducing liquidity,” he said. Leaf pointed to the challenge of attracting skilled workers to regions where stamp duty costs are high, as the financial strain of relocation can deter individuals from pursuing opportunities in higher-cost areas. He also noted that the tax’s structure inadvertently penalizes workers who need to move for career advancement, potentially stifling innovation and economic growth in regions reliant on a mobile workforce.
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The proposed threshold increase would primarily benefit buyers in London and the South East, where property values typically exceed £250,000. The reform would apply to standard residential purchases, with separate rates continuing for first-time buyers and second property acquisitions. Donnell’s intervention adds to ongoing debates about property tax reform and housing market liquidity. The current stamp duty structure has remained largely unchanged since the threshold was set at £250,000, despite significant property price growth in many regions. This stagnation has led to calls for a more subtle approach to tax policy, one that addresses the unique challenges faced by middle-market buyers without dismantling the entire system. The proposal represents a more targeted approach than complete abolition, focusing on the middle market segment where transaction costs have become a significant barrier to mobility. Whether the Government will consider such reforms remains uncertain, with no official response to the proposal issued at the time of publication.
