Current taxation policies are corrosive towards property market activity, says Propertymark. The latest data underscores that the present taxation policies are constraining property exchanges, thereby reducing both seller and buyer activity across the UK. This barrier may cause significant issues to the property market if left unaddressed, and it is therefore useful to draw attention to how the present taxation policies have influenced the property market. In particular, it has often inhibited property exchange activity.
Stamp Duty
A major source of contention among industry experts is the role that lowered stamp duty thresholds starting from April 2025 have had in shaping market activity.
From April 2025, stamp duty thresholds were lowered for first-time buyers from £425,000 to £300,000 and for existing homeowners from £250,000 to £125,000. In effect, many more homebuyers who had previously been exempt from paying stamp duty are now liable to pay stamp duty from April 2025 onwards.
On balance, the lowering of stamp duty thresholds has increased the volume of first-time homebuyers subject to stamp duty from 21% to 42%. Likewise, the volume of existing homeowners subject to stamp duty has risen from 49% to 83%.
The Office for Budget Responsibility expects stamp duty on residential properties to rise to £19.3 billion by 2029-30, compared to the £10.2 billion in 2024-25. Between January and October 2025, homebuyers paid £12.3 billion in stamp duty, an increase of 21% compared to the same period in 2024.
Alongside the rise in the number of homebuyers liable to pay stamp duty, the amount paid per transaction has also increased substantially. For existing homeowners in particular, the rise in the base surcharge from 3% to 5% has led to significantly higher costs when purchasing a property in the UK.
Jonathan Stinton, the head of intermediary relationships at Coventry Building Society, said: ‘Put simply, house prices have jumped by almost £100,000 since the thresholds were introduced, yet the tax bands unashamedly haven’t moved with them. Buyers today are being charged as though they’re shopping in a market from a decade ago’.
Thomas Pugh, the chief economist at RSM UK, argued: ‘From an economist’s perspective, stamp duty is certainly among the most damaging mainstream taxes and overdue for reform’, citing its negative impact in bringing down exchange activity due to the additional expenditure one has to account for when purchasing a property.
Main Consequences
Even though mortgage and interest rates continue to decline, Propertymark has identified that the volume of property transactions has declined in 2025. In 2021, 1,073,308 properties were exchanged; in 2025, this figure declined to 920,052, which represents a 14.3% fall over the four years.
Nathan Emerson, the CEO of Propertymark, said that lowered mortgage rates are ‘a positive step and will undoubtedly help many first-time buyers reassess their options’, yet the ‘affordability pressures remain complex, and property tax thresholds have failed to keep pace with rising house prices and wage growth over the past decade, increasing the tax burden on buyers.’
As a result, the market has experienced what Lisa Simon, the head of residential Carter Jonas, called a ‘wait and see approach’, further commenting: ‘When costs feel manageable rather than prohibitive, decisions come off pause and that shift, even if gradual, can turn “not yet” into “let’s go.”‘
However, structural issues in the tax system have led other industry experts to take a more cautious view. The mansion tax, due to be introduced in April 2028 and projected to raise £400 million annually by 2029–30, is regarded by critics as reinforcing—rather than reversing—the Government’s existing approach to property taxation.
For these reasons, Emerson said: ‘Propertymark believes reform is needed to create a fairer, more responsive property taxation systems across the UK that reduce upfront costs, support first-time buyers, and improve market mobility. Alongside this, action to boost housing supply and targeted support for those struggling to save for a deposit will be essential if homeownership is to become a realistic option for more people.’
Reforms to Property Taxation
A call for fairer taxation polices that facilitate an equitable playing field for all prospective homebuyers has picked up momentum over the past year. There is an awareness that the tighter taxation policies that have either been enacted or set to roll out have negatively shaped market activity.
Market patterns indicate that when overall costs are reduced, buyers are more motivated to participate in the property market. That precept underlined a common urgency to reduce the historically high mortgage rates that had constrained property activity between 2023 and 2025.
Equally, taxation policies are instrumental in directing property exchange activity. In turn, it is essential to consider how current tax policies can be modified to stimulate economic activity.
