This week it’s been released that The Treasury is considering a radical rethink of how we tax property in the UK.
Led by the chancellor, Rachel Reeves, officials are exploring a national property tax that could replace stamp duty on owner-occupied homes. They’re also considering whether, further down the line, to introduce a local property tax to replace council tax, with the aim of helping to support local finances.
Property tax is not just about raising revenue, it underpins how people move, where they live, and how local services are funded. Reform is long overdue, but the wrong approach could deepen the challenges already facing the housing market.
Why are the changes to property tax being considered?
Stamp duty is a barrier to mobility. For many buyers, it adds tens of thousands to the upfront cost of moving. This discourages people from downsizing, upsizing, or relocating for work, leaving families stuck in homes that no longer suit their needs.
Council tax is outdated and unequal. Still tied to 1991 property values, council tax penalises those in lower-value regions while under-taxing prime property in London and the South East. This creates regional inequalities and generational unfairness.
The housing market is stagnant. Transactions are at the lowest level since COVID. With friction at every stage of moving, the system has become a drag not only on households but also on the wider economy.
What we know so far
Here’s what we know as of late August 2025 about the UK’s property tax reform proposals:
One-off or Annual?
One-off sale levy replacing Stamp Duty
- Under current rules, buyers pay Stamp Duty Land Tax (SDLT) when purchasing a property. The government is exploring replacing this with a one‑off tax paid by the seller, applicable to owner‑occupied homes worth over £500,000
- This would shift the burden from buyers to sellers and could apply only at point of sale
Annual proportional property tax
Another proposal is an annual property tax, possibly replacing both stamp duty and council tax over time. Various models are on the table, including:
- A flat 0.44% per annum, mainly targeting homes over £500k
- Tiered rates such as 0.54% on value above £500k, rising to 0.81% above £1 million
- Another suggestion includes 0.44% for £500–£800k, stepping up to 0.54% beyond, and even 0.81% above £1m
How might this affect different homeowners?
3-Bed Semi – average-value home (~£270k)
- Under current proposals, no impact. Proposals target properties above £500k
- Owners would likely pay no levy, and a switch to an annual regime potentially reduces upfront costs compared to SDLT
High-Net-Worth Homeowners (£1m+)
- Annual levy: At 0.54%, a £1m home would incur £5,400/year; at 0.81%, it’s £8,100/year
- Over 20 years, that could sum to £108,000 – £162,000, far exceeding what would have been paid under SDLT – estimated as an additional £89,000 over 20 years in at least one analysis
- CGT on sale: Selling a £1m+ home could trigger a CGT bill: 18% for basic‑rate payers, 24% for higher‑rate – depending on gain amount
- One-off seller levy: Rate not defined, but could be significant for high-value properties
Please note: None of these changes are legislated yet—they are under active consideration ahead of the Autumn Budget, and implementation timelines remain uncertain.
The benefits:
- Greater fairness: Tying tax more closely to the real value of homes could correct long-standing regional and generational inequities.
- Unlocking mobility: Removing stamp duty could lower the barrier to moving, freeing people to relocate for jobs, family, or lifestyle.
- Strengthening local finances: A reformed property tax system could provide councils with more reliable, sustainable funding.
The risks:
- Annual financial burden: Rolling this out nationwide could tax people’s greatest (and often only) asset. With a rate that rises as property values increase, creating an annual financial burden many cannot easily pay (e.g. 1–2% on a £300,000 home = £3,000–£6,000/year).
- Market disruption: If poorly designed, new taxes could stall the market further. Higher-value homeowners could be disincentivised to sell, further reducing already-low transaction volumes.
- Uncertainty for homeowners and landlords: A national property tax would alter how millions of people plan for retirement, inheritance, and housing costs.
What it means for estate agents
For estate agents, property tax reform could reshape the market they operate in day-to-day. The removal of stamp duty might encourage more people to move, boosting transaction volumes and creating more opportunities for agents.
But the risks are just as significant. If reform introduces uncertainty for home-owners and landlords, chains could collapse and pipelines could stall.
Agents are often the first to feel changes in the housing market. A reform designed to make the system fairer and more efficient could unlock new growth for the industry. But a poorly executed overhaul risks slowing the market even further, leaving agents with fewer instructions and longer transaction times.
Our CEO, Riccardo Iannucci-Dawson, had this to say:
“Property tax reform would be the biggest shake-up in a generation. Right now the system is outdated and unfair with stamp duty adding tens of thousands to the cost of moving and locking people into homes that no longer fit.
Housing transactions are at their lowest level since the post-COVID boom. Well-designed reform could unlock mobility, but get it wrong and it risks stalling the market even further. For homeowners, an unpredictable annual charge linked to property values will be really hard to plan for. For landlords, multiple charges across portfolios could drive up rents or push them out of the sector. And for agents, sudden shifts create uncertainty and pipelines can grind to a halt.
At Alto, we power more than half of all UK housing transactions each year, so we see first-hand how friction in the system slows movers and the wider economy.
We think property tax reform is needed but it has to strike the right balance between raising revenue and supporting a healthy, mobile housing market. Otherwise, it risks undermining confidence when stability is needed most.”
Quickly adapt to market changes with Alto
At Alto, we power more than half of all UK housing transactions each year, so we know what uncertainty can do to agents, landlords, and movers.
Our platform is built to help agents adapt fast, even when the market is shifting. With end-to-end sales and lettings progression tools, Alto enables you to:
- Track chains and pipelines in real time – so you can spot risks early and keep transactions moving.
- Automate key workflows – reducing admin when teams are stretched by market disruption.
- Provide clear, timely updates to clients – building trust and keeping deals on track, even in volatile conditions.
Stay compliant and informed – with updates and tools that evolve alongside regulatory and tax changes.
One thing is clear: property tax reform is coming. The question is whether it will help people move more freely – or trap them even more tightly.
