Speculation over sweeping reforms to property taxation is already disrupting the housing market, despite no formal proposals being tabled, according to Fine & Country.
Rumours have circulated in recent weeks that the government is examining options ranging from shifting capital gains tax thresholds on homes worth more than £1.5 million to replacing stamp duty with an annual property tax.
And just yesterday it was revealed that landlords may soon be required to pay national insurance (NI) on rental income as the Treasury weighs new tax-raising options for Rachel Reeves’s upcoming budget.
Jonathan Handford (main picture), Managing Director of Fine & Country, says that speculation is already having an impact on the market.
INFLUENCING BEHAVIOUR
He says: “At present, these ideas are no more than think tank trial balloons floated to test public sentiment. There is no confirmed policy, draft legislation, or timeline for implementation.
“However, the mere suggestion of sweeping tax changes is already influencing behaviour. We are seeing buyers and sellers using these rumours as leverage, some attempting to renegotiate agreed sale prices, others pushing for accelerated exchanges and completions in anticipation of reforms that have not been announced.”
Handford warns that speculation itself can be “as damaging as legislation”, creating uncertainty that slows transactions, breaks chains and undermines confidence.
He adds: “This sense of paralysis ultimately harms everyone, from homeowners to businesses that depend on housing transactions.”
STABILITY AND CLARITY
Among the ideas generating debate is a proposal to abolish stamp duty and replace it with an annual levy based on property values, with higher bands applying as values increase.
Advocates argue that such a system would spread the tax burden more evenly across ownership, while critics warn it could impose a lasting financial strain on homeowners who are asset-rich but cash-poor.
“Unconfirmed proposals to dictate decision making risks undermining transactions and damaging market momentum.”
Handford says: “The UK property market thrives on confidence, stability, and clarity. Allowing unconfirmed proposals to dictate decision making risks undermining transactions, reducing mobility, and damaging market momentum at a time when confidence is beginning to recover.”
LEAKED CHANGES
He adds that while government has a responsibility to review property taxes, reforms must be approached with “care, clarity and sufficient lead-in time to avoid destabilising the market”.
He also says that leaked changes often prove more severe than the policies eventually implemented.
And he adds: “At Fine & Country we will continue to monitor developments closely and will provide clear guidance to clients should formal proposals be announced. Until then, our message to buyers and sellers is clear: focus on today’s market reality, not tomorrow’s speculation.”
