Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

MPs Urge Government to Consult on Stamp Duty Alternatives by Year End

MPs have called on the government to launch a consultation on alternatives to stamp duty before the end of the year. The Housing, Communities and Local Government (HCLG) Committee said reform is “necessary” to improve access to homeownership and address affordability issues.

The committee’s inquiry into affordable homeownership found that stamp duty creates barriers for people trying to buy homes. While some relief exists for first-time buyers, the report stated that stamp duty “reduces the affordability of homeownership, slows the property market, and ultimately damages the economy.” The committee acknowledged that stamp duty is a valuable source of government revenue but argued that reform is needed.

The report recommended that the Treasury and the Ministry of Housing, Communities & Local Government (MHCLG) begin the process of reforming stamp duty and consult on alternatives. Suggestions included a full replacement with a revenue-neutral alternative, reducing rates to stimulate transactions, overhauling banding thresholds to better align with house prices, and updating reliefs to meet government goals. The committee emphasised that any changes should be long-term and not short-term fixes that could distort market behaviour.

The committee also highlighted the lack of a statutory definition for affordable housing, noting that this leads to mixed opinions and that some housing labelled as affordable is not truly accessible for many people. The report called for the government to “clearly and officially” define affordable housing, suggesting that local average income levels should be considered rather than just local market prices or rents. It also recommended that the definition take into account the different challenges faced by people in various circumstances and locations.

On shared ownership, the committee said the scheme helps people onto the housing ladder but is not always affordable in the long term. While welcoming recent government reforms, the committee stated that shared ownership should not be the main form of affordable housing offered.

The report also addressed mortgage access, recommending that the government work with lenders to ensure renters are not blocked from obtaining a mortgage when their rental payments demonstrate affordability.

Additionally, the committee raised concerns about the government’s ability to meet its homebuilding targets and recommended that annual targets be published for transparency. The report noted the existence of hundreds of thousands of empty residential homes and suggested making it easier for local councils to take control of and recover long-term empty properties to boost housing supply and affordability.