Badenoch’s stamp duty rabbit sets the cat amongst the pigeons

The Autumn political conferences were a fairly lacklustre affair when it came to discussing housing policy but the Conservative party leader, Kemi Badenoch, changed all that by pulling the stamp duty land tax (SDLT) rabbit out of the hat. Her announcement that a future Tory government would abolish stamp duty completely produced a standing ovation in the hall but also ripples of joy and concern across the country.

This was, undoubtedly, an astonishing declaration which achieved its aim of immediately putting a popular major proposal into the political arena and forcing the other political parties to produce a response.

In Scotland our version of SDLT is the Land and Buildings Transaction Tax (LBTT) which raised almost three quarters of a billion pounds (£717.2 million) in the latest 12-month period, which equates to £1.9m per day.

In response, First Minister John Swinney has already said that LBTT is required to fund essential services in Scotland and that if it were scrapped then cuts would have to be made. Labour have also been caught out by this policy and, as a result, there is a growing view that Chancellor Reeves will feel compelled to announce a stamp duty policy response in next month’s Budget.

Reeves, with an estimated £30-50bn deficit is unlikely to abolish this lucrative tax totally but this announcement has demanded a political as well as fiscal response.

If The Chancellor did announce a change in her Autumn budget to soften the costs of home purchase, then this could result in an immediate boom in the housing market in England toward the end of this year and into 2026.

There will be many homebuyers who may currently be delaying buying a property due to the extra costs of SDLT but could suddenly act to take advantage of any tax reduction. This could result in an economic boost at a time when Ms Reeves is desperate to encourage growth. There are, therefore, quite compelling reasons both to steal Badenoch’s political thunder and initiate a policy to help grow the economy.

However, if there were significant changes to SDLT in November could the Scottish Government simply ignore this, or would they be forced to respond? If the Chancellor were to abolish stamp duty in England, then there is little doubt that the Scottish Government would have to follow suit. The differing cost of SDLT and LBTT is already an unequal and unfair tax burden which, if abolished completely south of the border, would become untenable in Scotland.

But then, what if it wasn’t abolished but the burden was eased a little? This too would require a response from the Scottish Government which is already under pressure over the widely differing costs of home purchase north and south of the Border.

With more people working from home, and geography playing a smaller part in deciding where to live, you could see a substantial shift in the property market away from Scotland if homebuying taxes were to diverge. Maintaining a strong housing market is key to building growth in the economy so any change which made buying property in England cheaper than Scotland could have serious implications now and in the future.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​