Scrapping stamp duty may sound like a quick fix to Britain's housing crisis, but there's reason to believe it would barely move the needle on affordability - while costing the Treasury billions.
Authors
- Nigel Gilbert
Professor of Sociology, University of Surrey
- Corinna Elsenbroich
Reader in Computational Modelling, University of Glasgow
- Yahya Gamal
Research Assistant (Urban Big Data), University of Glasgow
At the Conservative party conference, leader Kemi Badenoch announced that a future Tory government would abolish stamp duty for people buying their main home. Badenoch called stamp duty "tax on aspiration" that traps families and holds back social mobility.
But research we conducted with colleagues casts doubt on this claim. We tested it using a detailed computer model of the English housing market. Our results told a different story.
Our simulation found that removing stamp duty, which the Tories themselves estimated would cost between £9 billion and £11 billion a year in lost revenue, would make almost no difference to house prices, rents or people's ability to buy a home. It might be politically attractive, but the proposal would deliver little benefit to those most in need of help and would hand the biggest savings to wealthier buyers.
To understand why, it is helpful to examine what stamp duty actually does. Buyers in England and Northern Ireland pay the tax on property purchases above £125,000, with rates increasing for more expensive homes. ( Scotland and Wales now have their own systems.)
The logic of abolishing it is simple enough: if you cut upfront costs, more people can afford to move. But our research shows this doesn't translate into meaningful change.
We built an agent-based computer model that simulates the behaviour of thousands of virtual households across England. These digital households vary in income, family size, tenure and employment status. They make realistic decisions about saving, renting, buying and selling property over time. The model mirrors how the market behaves when conditions change, such as when interest rates rise or a tax is removed.
When we ran the model without stamp duty for main homes, very little changed. Buyers could save for a deposit slightly faster because they no longer needed to set aside money for the tax. But the overall patterns of prices and transactions remained almost identical to the current system.
In other words, removing stamp duty gave households a modest short-term boost without altering the deeper forces that shape the market.
Rising deposits
For most people, the real barrier to home ownership is the deposit, not the tax. The average first-time buyer now needs around £60,000 to put down a deposit, while abolishing stamp duty would save them only a few thousand pounds. It's the difference between climbing a mountain and skipping the last step.
More importantly, the benefits of scrapping stamp duty wouldn't be shared evenly. Buyers of high-value homes, who currently face rates as high as 12% , would gain the most.
First-time buyers and those buying modest properties would see only a small difference. That makes the policy regressive - it helps those already well-off far more than those struggling to get on the ladder.
Our model also highlights how tightly connected the housing system is. Changes in one part of the market ripple through others. If more affluent buyers rush to buy expensive homes, prices can rise further up the chain, offsetting any small gains made lower down. Renters, meanwhile, would see no direct benefit.
This complexity explains why policies that look straightforward, often disappoint in practice. Housing markets are shaped by multiple factors: interest rates, planning restrictions, the supply of new homes and people's incomes. Tweaking a single tax rarely shifts the overall picture.
The findings underline a broader point about policymaking. Governments often announce headline-grabbing tax cuts or incentives without fully testing their effects. But simulation models like ours can provide a powerful way to forecast outcomes before they happen in the real world.
They allow researchers to explore how thousands of households, landlords and lenders interact, revealing unintended consequences that might otherwise be missed.
In this case, the message is clear: abolishing stamp duty might sound like a lifeline for aspiring homeowners, but it's unlikely to change who can actually afford to buy. The real solutions lie elsewhere: in building more homes, addressing stagnant wages and improving access to affordable credit.
The housing crisis is one of the defining challenges of our time. Quick fixes make for good headlines, but data-driven evidence should guide decisions that affect millions of people. Before policymakers reach for the next easy answer, they would do well to test whether it's genuinely likely to work.
Nigel Gilbert receives funding from the Economic and Social Research Council. He is a Fellow of the Royal Academy of Engineering.
Corinna Elsenbroich receives funding from UKRI. She is a member of the Labour Party.
Yahya Gamal (Yahya Gamalaldin) receives funding from UKRI.
