Stamp Duty Reform 2026: What the SDLT Consultation Means for Property Buyers

On 9 June 2026, a cross-party committee of MPs formally told the government to consult on replacing stamp duty before the end of the year, calling the tax a drag on the housing market and a barrier to home ownership.

Key Takeaways

• Consultation Demanded: The HCLG Committee wants a formal SDLT consultation before the end of 2026, examining revenue, fairness and market friction.
• Four Models in Play: Full replacement with a proportional property tax, rate reductions, threshold reform and updated reliefs are all being considered.
• £15.2bn Revenue at Stake: SDLT raised £15.2bn in 2025-26, making any replacement a significant fiscal challenge for the Treasury.
• Buy-to-Let Impact: Under the leading replacement model, annual tax on a £300k BTL would be £2,880 per year, replacing the current one-off £14,000 SDLT bill.

Why the Government is Reviewing Stamp Duty

Stamp duty raised £15.2bn in 2025-26, up from £13.9bn the previous year. On paper, the tax works. In practice, MPs, economists and property professionals increasingly agree it does more harm than good.

The Housing, Communities and Local Government Committee published its report on 9 June 2026, warning that home ownership rates in England have declined over the last 20 years. The committee's chair, Florence Eshalomi MP, called the current system a contributor to affordability problems and urged the government to consult on alternatives.

The core argument is well evidenced. SDLT is a transaction tax: it punishes people for moving. Analysis from Tax Policy Associates estimates the current rate structure deters 25,000 to 30,000 households per year from moving, even though it still raises revenue. Around 40% of English households are under-occupied while 3% are overcrowded, according to the English Housing Survey, and SDLT contributes to that mismatch.

Quick FAQ:

Q: Does stamp duty actually stop people from moving house?

A: Yes. Analysis by Tax Policy Associates estimates the current SDLT structure deters 25,000 to 30,000 households per year from moving. The effect is strongest on downsizers and long-distance, job-related moves, where the transaction cost outweighs the financial benefit of relocating.

What the HCLG Committee Recommended

The committee stopped short of backing a specific replacement model. Instead, it called for a formal consultation before the end of 2026, covering four factors: revenue-raising power, impact on market friction, progressiveness and fairness.

Critically, the committee recommended that SDLT reform should take place alongside council tax reform, a position it had already set out in a previous report on local government finance. The two taxes interact, and any replacement that merges or replaces both would reshape how property is taxed at every level.

The report also flagged the empty homes problem. Hundreds of thousands of residential properties sit empty across England. The committee recommended giving councils stronger powers to bring them back into use, a supply-side measure that would complement any demand-side tax reform.

Four Reform Models on the Table

The consultation is expected to examine at least four distinct approaches. Each has different implications for property buyers, investors and the Treasury.

1. Full Replacement with a Proportional Property Tax

Replace both SDLT and council tax with a single annual levy based on current property values. The Fairer Share campaign proposes a rate of 0.48% on primary residences and 0.96% on second homes, buy-to-let properties and overseas-owned homes.

2. Rate Reductions to Stimulate Transactions

Keep SDLT but cut rates across the board to reduce market friction. The theory: lower rates generate more transactions, partially offsetting the revenue loss. However, Tax Policy Associates' analysis of the April 2025 threshold reset showed that higher rates still raised revenue, suggesting SDLT is not yet near the top of the Laffer curve.

3. Threshold Reform Tied to Local Property Prices

Overhaul the SDLT banding system so thresholds reflect local market conditions rather than applying nationally. A £250,000 property means something very different in Burnley than in Brighton. Indexed thresholds could reduce regional distortions without changing the tax structure itself.

4. Updated Reliefs and Exemptions

Keep the current structure but retarget reliefs to match government priorities. Options include expanding first-time buyer relief, introducing downsizer relief to free up family housing, or reforming multiple dwellings relief.

Quick FAQ:

Q: Which stamp duty reform model is most likely to happen?

A: The HCLG Committee did not recommend a specific model. However, the Prime Minister has publicly backed the proportional property tax, making it the most politically prominent option. Any change would require primary legislation and multi-year transition planning.

The Proportional Property Tax, Explained

The proportional property tax (PPT) is the most radical option on the table, and the one with the most political momentum behind it.

Under the Fairer Share model, every residential property would pay an annual charge based on its current market value. Primary residences would pay 0.48% per year. Second homes, buy-to-let properties and overseas-owned homes would pay 0.96%.

On a £300,000 primary residence, that is £1,440 per year. On a £300,000 buy-to-let, it is £2,880 per year.

Fairer Share claims 77% of households would pay less than under the current council tax and SDLT system, with an average annual saving of £556. A separate Centre for London report published in May 2026 estimated that a PPT could generate an additional £912m per year for social housebuilding.

The trade-off is significant for higher-value properties. In London, 63% of dwellings would pay more, with increases reaching thousands per year for properties valued above £1m.

Quick FAQ:

Q: How much would a proportional property tax cost on a buy-to-let?

A: Under the Fairer Share model, a buy-to-let property would pay 0.96% of its current market value per year. On a £300,000 apartment, that is £2,880 annually. On a £500,000 property, £4,800 per year, on top of income tax, mortgage costs and maintenance.

What Each Model Means for Buy-to-Let Investors

The four models create very different cost profiles for investors. This comparison uses a £300,000 buy-to-let apartment as the baseline.

The PPT is the only model that fundamentally changes the cost profile of holding property. All other models are refinements of the existing transaction-based approach.

For investors holding a portfolio long-term, the PPT creates a recurring cash-flow obligation that compounds with property value growth. For investors who buy, improve and sell, removing the SDLT entry barrier could make shorter-hold strategies more viable. The current SDLT system penalises both entry and exit. A PPT would penalise holding instead.

For a full breakdown of current SDLT costs at different price points, see our stamp duty for buy-to-let investors guide with worked examples at £200k, £400k and £750k.

What Happens Next

The committee's report is a recommendation, not legislation. The government is under no obligation to launch the consultation, but three factors make action more likely than previous reform calls.

First, the Prime Minister has publicly backed the Fairer Share proportional property tax during his time as Mayor of Greater Manchester. His position is not yet confirmed government policy, but it signals serious political appetite for structural change.

Second, the HCLG Committee is cross-party. The recommendation reflects broad parliamentary concern about affordability and market efficiency, not a single faction's agenda.

Third, the fiscal arithmetic is getting harder to ignore. SDLT raised £15.2bn in 2025-26, but analysis shows that each rate increase damages economic mobility while still raising revenue. That is the worst kind of tax from an efficiency standpoint: it works fiscally but does real economic harm.

If the consultation launches before the end of 2026 as recommended, any resulting legislation would take years to draft, consult on and implement. Property investors should not expect changes before 2028 at the earliest, and a full PPT transition would likely require a multi-year phase-in.

Quick FAQ:

Q: When could stamp duty actually be replaced?

A: Even if the consultation launches in 2026 as recommended, legislation would take years to draft and pass. A full transition to a proportional property tax would likely require phasing over several years. Property investors should not expect changes before 2028 at the earliest.

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Rothmore's View

Stamp duty reform has been debated for decades, but this is the first time a sitting select committee has demanded a consultation and a sitting Prime Minister has publicly backed a specific replacement model. The direction of travel is clearer than it has ever been, even if the timeline is not. Investors buying today should model their purchase on current SDLT rates, not on the assumption that reform will arrive in time to change the numbers.

Disclaimer: Rothmore Property does not provide tax advice. The reform proposals discussed in this article are subject to consultation and may change significantly before any legislation is introduced. Always confirm your specific SDLT liability with a solicitor or qualified tax adviser before completing a purchase.