What Is Stamp Duty — and Why Do We Still Have It Anyway?

What Is Stamp Duty — and Why Do We Still Have It Anyway?

I get asked this all the time.
“What actually is stamp duty?”
“Why do I have to pay it when I move house?”
“Is it just another way the government makes money?”

So, I thought I’d write down my take on it — what it’s for, where it came from, and why it’s being talked about again this week with Kemi Badenoch pledging to scrap stamp duty on primary residences if she becomes the next Conservative leader.

The Forgotten Origin: A Temporary Tax from 1694

Stamp duty wasn’t designed for property at all.
It began in 1694, introduced by King William III to help fund a war against France. The idea was simple: every official document had to carry a paid stamp — proof the tax had been paid. It was meant to be a temporary measure lasting just four years.

Three centuries later, the “temporary” tax is still here — and has evolved into one of the Treasury’s biggest property-related revenues.

How It Works Today

Today’s version is called Stamp Duty Land Tax (SDLT) and applies to property purchases in England and Northern Ireland. When you buy a home, you pay a percentage of the purchase price in tax.

Here’s a quick example for a standard residential buyer:

• 0% on the first £125,000

• 2% on £125,001 to £250,000

• 5% on £250,001 to £925,000

• 10% on £925,001 to £1.5 million

• 12% above £1.5 million

If it’s a second home or a buy-to-let, there’s usually an extra 3% surcharge.

The average homebuyer pays close to £10,000 in stamp duty, often before they’ve even moved in or unpacked a single box. For many, it’s one of the most painful costs of buying a home — particularly for families trying to move up the ladder.

My View: It Fines Families for Aspiration

When I look at how stamp duty affects the market, I see the same problems repeated again and again.

It punishes aspiration — people wanting to move to a better home for their family are hit with a tax bill for doing so.
It discourages downsizing — older owners who might free up family homes often hold off because they don’t want to pay thousands just to move into something smaller.
It reduces choice — fewer people moving means fewer properties on the market, which pushes prices higher and keeps the system clogged.

It’s ironic really: a tax designed to raise revenue ends up freezing the very market it’s applied to.

Why It’s Suddenly Back in the Headlines

In early November, Kemi Badenoch announced that a future Conservative government would abolish stamp duty on primary residences — that’s homes people live in as their main address.

The idea is that it would make moving home more affordable, free up housing stock, and stimulate the economy. It’s estimated to cost the government billions in lost revenue, but the political message is simple: help families move.

On the surface, that sounds fantastic — a bold, pro-housing reform. But as someone who works day-to-day in property, I have a few concerns.

What Happens When You Take a Major Tax Away?

I’ve seen governments “scrap” taxes before.
What usually happens? They replace it with something else.

If stamp duty is removed, that £9 billion-plus in annual income has to come from somewhere. That could mean:

• A new annual property or wealth tax

• Higher council tax bands

• A land-value tax

• Or other hidden costs on ownership rather than purchase

So while families might cheer at the idea of “no stamp duty,” we could easily see another form of taxation slip quietly into its place.

The Bigger Picture: Why Stamp Duty Distorts the Market

Here’s what I see, working on the ground with buyers, sellers, landlords and tenants across Solihull, Birmingham, and the wider West Midlands.

Stamp duty:

• Slows mobility. People stay in homes longer than they need to.

• Blocks the property ladder. Younger families can’t move up because older ones can’t afford to move down.

• Hurts the economy. Fewer moves mean fewer renovations, fewer removals, and less local spending.

• Creates artificial pressure. Limited stock drives competition and inflates prices, especially in sought-after areas.

Removing it could release some of that pressure — but only if it’s handled sensibly.

What It Could Mean If Abolished

If stamp duty on main residences is truly abolished, I expect:

• More people to move, freeing up homes across all price bands.

• Increased confidence in the housing market.

• Stronger demand in regional areas like Solihull and Birmingham — not just London.

• A more fluid “ladder” where families can actually move as their needs change.

For us as estate and letting agents, it could mean more instructions, faster transactions, and a healthier flow of properties through the market.

But again, the question remains — what will replace it?

My Honest Concern

I’m all for anything that makes moving easier for families.
But the cynic in me suspects the Treasury won’t give up that revenue without finding another route to collect it.

If the government really wants to stimulate the housing market, it should focus on:

• Streamlining planning

• Encouraging downsizing through incentives

• Increasing housing supply

• Reforming council tax to reflect modern property values

Simply swapping one tax for another won’t fix the fundamental issues.

Final Thoughts

Stamp duty has survived more than 300 years of political promises, tweaks, and “temporary” fixes. It was never meant to last this long, yet here it is — a tax from a 17th-century war still shaping 21st-century housing policy.

So yes, scrapping stamp duty on primary homes would be a huge win for families and movers. But unless it’s replaced with a fairer, long-term solution, we could easily find ourselves back in the same position — just with a new label.

For me, the principle is simple: moving home shouldn’t be punished.
It should be encouraged — because a fluid housing market is good for families, good for the economy, and good for communities.

Quick Q&A: Common Stamp Duty Questions I Get Asked

Q: What exactly is stamp duty?
A: It’s a tax you pay when buying property in England or Northern Ireland, based on the purchase price and whether it’s your main or additional home.

Q: Why is it called stamp duty if there’s no stamp?
A: Originally, legal documents had to be physically stamped to prove the tax was paid. The name stuck, even though it’s now all done electronically.

Q: How much does the average buyer pay?
A: Around £10,000 on average — more on higher-value homes or second properties.

Q: Does it really stop people from moving?
A: Yes. Many families tell me they’d move sooner if the cost of stamp duty wasn’t there. It creates a psychological and financial barrier.

Q: If it’s abolished, what happens next?
A: Moving will become more affordable — at least in the short term. But the government is likely to replace it with another form of property tax, so the overall cost of ownership may not fall by as much as people hope.

Q: Is there anything people can do in the meantime?
A: If you’re planning a move in the next 12–18 months, it’s worth reviewing your options now. Market conditions, mortgage rates, and policy changes can all affect your timing. If you’re unsure, speak to an experienced local agent — we help clients plan the right move at the right time every day.

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