Industry hits out at rumours as No 10 denies plan to abolish stamp duty and council tax

Andy Burnham is “not considering” scrapping stamp duty and council tax, Downing Street has said, as the government moves to pour cold water on rumours of major tax changes that had spooked property sector leaders.

Business chiefs condemned the government over the danger of property tax speculation after reports over the weekend suggested that Burnham was “actively considering” replacing stamp duty and council tax with either property-based or land-value levies.

Downing Street officials slapped down the story as “not true” and “pure speculation” in a bid to prevent the story from distorting the housing market in advance of the budget.

But executives have warned the government against another long period of damaging speculation after leaks in advance of Rachel Reeves’ budget last year fuelled property market panic.

Simon French, chief economist at Panmure Liberum, said: “This speculation of Stamp Duty/Property Tax may be seen to have a value in ‘rolling the pitch’ for change but the outcome is likely to be a freeze on transactions between now and the Autumn Budget (and potentially beyond) as speculation over incidence and transitional protections discourage activity.”

Burnham ‘mooting taxes through the press’

Simon Gerrard, chair of Martyn Gerrard Estate Agents, said that Burnham’s premiership has “begun with the same old mistakes made by the short-lived leaders of recent years.”

“We were supposed to enjoy a period of relative political stability after the tumult caused around the anticipated Budgets of last year,” he said. “Now we’re back to sweeping reforms and new taxes being mooted through the press.”

Last autumn, London house prices plummeted at their fastest rate since the global financial crisis after months of speculation over whether Reeves would reform stamp duty or extend capital gains tax to primary homes.

Property experts had warned the damage caused was likely to put a cap on the industry’s growth this year, even before the Iran war sent building costs soaring and flattened consumer demand.

Andy Burnham has previously backed reforms to property taxes and has dubbed land-value taxation a form of “aspirational socialism”. During the 2010 Labour leadership contest, the now-Prime Minister described stamp duty as “a tax on the aspirations of young people to put down roots and get on in life”.

Stamp duty reform ‘poses significant risk’

Timothy Douglas, head of policy at estate agency trade body Propertymark, told City PM that he supports a reform to stamp duty but warned that long-running speculation over property tax changes can harm the market.

He said: “Propertymark wants to see reform to Stamp Duty as it is a barrier to people moving. However, any reforms must not be counterproductive but well thought through.

“As we highlighted to the Housing Committee inquiry on the affordability of home ownership earlier this year, months of speculation is not helpful and risks cooling the housing market.”

Centre for London, a leading think tank, has warned that a new flat-rate property-based tax could saddle Londoners with £800 per year in extra bills, while tax experts warn a new system could trap cash-poor homeowners with thousand-pound bills.

Last week, Burnham ally Lord Blunkett told The i Paper that any move to replace stamp duty and council tax would take years to implement and would be “politically problematic”.

Vanessa Hale, chief executive of trade body Real Estate UK, told City PM: “As Lord Blunkett has pointed out, changes to property taxation would not only be hugely disruptive and complex but also carry significant political risks that any Government would need to weigh up before committing political capital to policy development, consultation and ultimately legislating on.”

A Downing Street spokesperson said: “Decisions on tax are for the Chancellor to set out at the Budget. It wouldn’t be right to comment outside of it.”