Badenoch vows to scrap stamp duty for primary homes in bid to free up housing market
Kemi Badenoch has promised to abolish stamp duty if the Conservatives win the next election, while announcing a series of tax cuts in a bid to win back voters and boost the party’s ratings.
Outlining the major policy announcement to a packed audience at her Tory conference speech on Wednesday, she said the move to scrap the “bad tax” would “help achieve the dream of home ownership for millions”.
The plans, which the Conservatives say will cost around £9bn, have been praised by economists, but questions remain over how the party will pay for it.
After a lackluster party conference, Ms Badenoch also used her speech to take aim at Labor, vowing to overturn a range of policies introduced by Sir Keir Starmer’s government:
Ms Badenoch, whose opening speech focused on securing the UK’s borders by withdrawing from the European Convention on Human Rights, then set out her vision of a country where the state “does less, but does it better” and “where profit is not a dirty word”.
He promised to apply a “golden rule” to budget plans; It spent only half of the savings through spending cuts, while the rest reduced the budget deficit.
Ms Badenoch, who has pledged to deregulate the housing market by removing stamp duty on people’s first homes, said: “Stamp duty is a bad tax. We must deregulate our housing market, because a society where no-one can afford to buy or move is a society where social mobility is dead.”
Stamp duty brought in an estimated £13.9bn in the last financial year, but the bulk of this came from outhouses and other buildings.
The Institute for Fiscal Studies (IFS) has estimated that removing stamp duty on primary homes would cost around £4.5bn and has backed the plans.
Paul Johnson, the organization’s former director, said: Independent Abolishing the tax would be his “first port of call” but he called for it to be accompanied by an increase in council tax on high-value properties to claw back some of the money spent.
“It would be great to abolish stamp duty,” he said. “If you’re going to do that, there’s a very strong case for increasing council tax on high-value properties. Stamp duty is a drag on the housing market.”
But he warned this should be accompanied by second-home cuts to prevent the policy from increasing “distortions and disincentives to rents”.
“If you remove that for prime properties and leave it to others, that further increases distortions and disincentives in rents, so you need to reduce it by at least the same amount,” he said.
But former government economist Jonathan Portes accused the Conservative Party leader of not having “even a remotely credible plan” to pay for his planned tax cuts and described the package of spending cuts as “ridiculous”.
While he agreed that stamp duty was a “very bad tax”, he warned: “The Conservatives have claimed to be the only party offering fiscal responsibility and yet they are proposing huge tax cuts, including this one, with no remotely credible plan to fill the gap because the spending cuts package is ridiculous,” the former Treasury adviser said. Independent.
Tom Bill, head of housing research at UK estate agents Knight Frank, said the move would be “warmly welcomed” by buyers and sellers and would “inevitably have positive repercussions on the wider economy and increase social mobility”.
The Homeowners Alliance also backed the policy as a “real vote-winner”, saying stamp duty was blocking “too many homeownership opportunities for too long”.
“Kemi Badenoch is right: this is a tax that traps households, hinders mobility and suppresses market activity,” they said.
But Theo Betram of the Social Market Foundation warned the plans would disproportionately benefit “homeowners and those in the south-east and London” and said the test would be whether the Conservative Party could actually save “at least £12bn a year to fund the cut”.
The Conservatives, who claimed Chancellor Rachel Reeves was planning a significant increase in stamp duty in her autumn budget, said they had “cautiously” estimated that scrapping the tax would cost £9bn.
They said the money would come from the £47bn savings shadow ministers claim to have found, made up of welfare cuts, downsizing the civil service and further cutting the country’s foreign aid budget.
It comes amid reports that the Treasury is considering introducing a new national property tax on the sale of homes worth more than £500,000 as part of a major overhaul of stamp duty and council tax.
The Conservative leader’s speech brought to a close the conference, which was overshadowed by questions about his leadership and the threat from Reform UK.
Just yesterday, Nigel Farage’s party announced that 20 councilors were leaving the Conservative Party, while a poll published by More in Common on Wednesday showed the Conservatives remain in third place.
After the speech, Labor leader Anna Turley said Ms Badenoch was in “total denial” about the party’s record, adding: “The public have seen the Tory plan for Britain to be disastrous throughout its 14 years of failure in government – and the Conservatives still have no apology for the mess they have left.”
Liberal Democrat leader Sir Ed Davey called on “one-nation” Conservatives to join his party, accusing Ms Badenoch of deciding to “abandon the traditional British values of tolerance, civility and the rule of law” over her plans to leave the European Convention on Human Rights.
Green Party leader Zack Polanski also said Ms Badenoch was “speaking to the floor without listening to the nation”.
