Joanna Marchong: Stamp duty is a bad tax. In fact, it is the worst tax on our books

When Kemi Badenoch pledged to scrap Stamp Duty on primary residences, it was one of those rare political moments that cut through the noise.

Not because it’s flashy or populist, but because it spoke to something many have quietly known for years: Stamp duty is a bad tax. In fact, it is the worst tax on our books. It is economically distorting, socially regressive, and long past its sell by date.

Milton Friedman once said that “nothing is so permanent as a temporary government program”.

Stamp Duty Land Tax (SDLT) is the textbook example of this. First introduced in 1694 to fund a war against France, it was meant to be temporary. The war ended. The tax didn’t, even if our relationship with our friends over the channel can still be a bit grumpy. Three centuries later, it’s still quietly sabotaging the housing market and punishing ordinary people for doing something any sane government should encourage: moving house.

Despite the name, “Stamp Duty Land Tax” is, let’s be honest, a tax on moving.

It punishes aspiration. It fines families for finding a home that suits them better. And it treats shelter like it’s some sort of luxury. For years, we’ve told younger generations to work hard, save, and get on the property ladder. Then, the moment they try, the Treasury slaps them with a bill for thousands of pounds. The average buyer now pays nearly £10,000 in Stamp Duty just to move. Ten thousand pounds, for the privilege of doing what you’ve been told since you were a child?

The result is a housing market that has become rigid and inefficient.

Older couples delay downsizing because they cannot justify the cost, while younger families cannot move up. Fewer homes come to market, so prices remain high and supply remains tight. Britain’s housing market has become a game of musical chairs with the music turned off.

Britain used to be a nation that prided itself on widespread home ownership and social mobility, now the state of the housing market has become a quiet scandal. Home ownership has fallen from over 70 per cent in the early 2000s to around 64 per cent today – the lowest level in decades. Conservatives used to believe in a property-owning democracy, the idea that if you worked hard and played by the rules, you could own a piece of your country. Schemes like Right to Buy reflected that national aspiration: to give people a stake in the country they helped build. That’s not a nostalgic Thatcherite dream; it’s a social contract.

And Stamp Duty has been smashing it up.

That’s why Badenoch’s decision matters. It’s more than just a tax tweak, it’s a statement of principle that will tackle the root of issues that have persisted in our housing market. According to the Adam Smith Institute’s new research, getting rid of Stamp Duty on primary residences could unlock an extra 349,000 house sales a year and lead to the creation of 38,000 new homes, around ten per cent of the government’s annual housebuilding target. The same analysis suggests it could generate nearly £13 billion in additional construction spending each year, supporting jobs, growth, and mobility.

This is fundamentally how you stimulate growth, by removing obstacles and letting people get on with their lives. For too long, we’ve allowed the Treasury to shape housing policy around what’s easiest to tax, not what’s fairest or most efficient. That’s one of the reasons we’ve ended up with young people locked out of ownership and older people locked into houses they no longer want. Abolishing stamp duty flips that logic.

Predictably, there’ll be the usual nervous muttering from Treasury mandarins about lost revenue. There always is. But the total cost isn’t as detrimental as one may believe, as our modelling shows that the cost of this abolition would be £5bn, which is a modest cost compared to the broader economic and societal gains at stake. A more mobile housing market would stimulate activity, create jobs and expand the tax  base everywhere. And as transaction volumes rise, so too would revenue from other sources like VAT and income tax.

The moral and economic case for scrapping Stamp Duty couldn’t be clearer. It’s a bad tax that punishes good behaviour. It chokes off mobility, productivity, and restricts opportunity. Abolishing it would not just make buying a home fairer, it would make Britain’s economy more dynamic and its society more mobile and open to opportunities.

Naturally SDLT is not the only obstacle to fixing Britain’s housing market.

Right now we have a broken planning system that continues to make investment slow and expensive.

Developers face case-by-case decision-making that deters innovation and adds years to the process of getting homes built. Outdated restrictions on land use, particularly in areas close to transport links, further constrain supply and inflate prices. Scrapping Stamp Duty is an important first step towards restoring movement and confidence in the housing market. But if Britain is serious about getting homes built, it must go further.

This should only be the beginning.