Research commissioned by national home buying company Spring suggests that reforming stamp duty charges for property traders could increase UK housing transactions by up to 178% annually.
The study, conducted by Volterra, found that removing the Higher Rate for Additional Dwellings (HRAD) surcharge for corporate traders could generate an additional 168,000 property sales each year if a full Stamp Duty Land Tax (SDLT) exemption were implemented.
Impact on property traders
Property traders, who purchase homes for short periods to facilitate property chains, currently face the same additional stamp duty charges as second-home buyers and portfolio landlords. The HRAD surcharge adds five percentage points to stamp duty bills on most second-hand property purchases.
The report indicates this additional taxation is constraining activity in a market already facing challenges with stalled transactions. Data shows that approximately 30% of agreed sales collapsed in 2024, often resulting in sellers incurring thousands of pounds in legal, survey and moving costs.
Transaction modelling
According to the research, SDLT functions as a barrier to movement across the housing market. The modelling suggests that every 1% increase in the tax reduces annual transaction levels by approximately 3.5%. This affects various market segments, including downsizers, families requiring larger properties, and individuals relocating for employment.
The findings come as stamp duty policy continues to attract scrutiny from tax professionals and industry observers. While some stamp duty relief exists for traders purchasing new-build homes, the report notes that most second-hand property acquisitions still attract the full HRAD surcharge.
Market liquidity concerns
Shane Miller-Bourke, co-CEO of Spring, stated that increased market liquidity would be necessary to support new home delivery targets. He noted that planning reform alone would be insufficient to address housing market challenges.
Miller-Bourke added that SDLT reform focused on liquidity could deliver significant results, arguing that both supply and demand-side measures would be required given the scale of housing challenges.
The research contributes to ongoing debates about housing market efficiency as transaction volumes and market conditions continue to evolve across different property sectors.
Conclusion
The study presents quantitative projections on how stamp duty modifications could affect transaction volumes, though implementation of such changes would require government policy decisions. The research highlights the relationship between transaction taxes and market liquidity in the UK housing sector.