The government’s ambition to build 1.5mn new homes risks being undermined by frozen stamp duty thresholds that are making it increasingly expensive for households to move, according to tax advisers.
Mark Cunningham, a partner at Blick Rothenberg, said the growth in property prices without corresponding increases in stamp duty thresholds had pulled more transactions into higher tax bands, creating a drag on housing market activity.
The average UK house price rose about 28.4 per cent from £211,230 in May 2016 to £271,295 in May 2026. Over the same period, stamp duty payable on an average-priced property more than doubled, from £1,725 to £3,565 — a 106.7 per cent increase.
“The government’s ambition to deliver 1.5 million new homes recognises the importance of housing to economic growth and prosperity,” Cunningham said. “But frozen thresholds have slowly dragged more of each transaction into higher tax bands.”
He warned that higher transaction taxes could discourage homeowners from moving, reducing the number of properties changing hands and weakening demand for new-build homes.
Builders, he said, would only continue developing at scale if there were sufficient buyers to make projects profitable.
The effect becomes more pronounced higher up the market. If stamp duty thresholds had risen in line with average house prices since 2016, the nil-rate threshold would now stand at roughly £160,500 rather than £125,000. The £250,000 threshold would have risen to about £321,000, while the £925,000 threshold would approach £1.2mn.
A purchaser of a £1mn property is now paying almost £6,600 more in stamp duty than under an inflation-adjusted threshold system, according to the analysis. At £2mn, the difference exceeds £24,500.
Cunningham acknowledged that stamp duty was not solely responsible for weaker housing activity. Covid, temporary tax holidays, higher mortgage rates and affordability pressures have all distorted the market over the past decade.
But he argued that the direction was becoming increasingly difficult to ignore.
“Over the last decade, the SDLT payable on the average property has more than doubled, while residential transactions in England and Northern Ireland are lower than they were ten years ago,” he said.
The tension presents a challenge for ministers seeking to increase housing supply while maintaining tax revenues.
A tax that raises more from each transaction may appear attractive to the Treasury in the short term. But if it discourages transactions, reduces mobility and weakens demand, it could ultimately undermine the construction activity needed to deliver the government’s 1.5mn-home target.
The housing market therefore faces a fiscal paradox: the more expensive it becomes to move, the harder it may become to generate the transactions on which Britain’s housebuilding ambitions depend.
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