Abolishing Stamp Duty on primary residences could allow for 38,000 homes to be built and 349,000 housing sales every year, analysis from the Adam Smith Institute (ASI) found.
The ASI said Stamp Duty Land Tax (SDLT) is one of the most inefficient and unfair taxes in the UK.
This comes ahead of the Budget as the Government is set to miss its homebuilding target, with 695,000 housing transactions completed in 2024/25, below pre-2008 averages of 800,000.
The ASI found that removing Stamp Duty on owner-occupied homes would boost homeowner mobility by 56%, leading to 349,000 more housing sales each year and 38,000 new homes as developers reinvest in new builds.
Stamp Duty raised £13.9bn in 2024/25, just 1.3% of total Government revenue.
The static cost of removing it on primary residences would be £9.2bn, but with higher construction, wages, and spending it would drop to £5.1bn a year.
The research found the reform would increase housebuilding by £12.9bn a year, wages by £2bn, and generate £610m in extra VAT from household spending on renovation and decoration.
The planning system was also highlighted as a key obstacle, making investment uncertain and expensive due to case-by-case planning decisions.
Other property taxes were noted as making the problem worse.
The ASI called scrapping Stamp Duty a first step, also recommending removing Green Belt status for intensive agricultural land and lifting restrictions on Green Belt land within 10 minutes’ walk of a railway station.
Shadow Secretary of State for Housing, Communities and Local Government and Member of Parliament for Braintree James Cleverly, said: “Stamp Duty is one of the most damaging, un-Conservative taxes in Britain. It traps families, stifles aspiration, and holds back the economy.
“The Adam Smith Institute’s research shows that scrapping it wouldn’t just help first-time buyers – it would unlock tens of thousands of new homes, support small businesses, and help build a stronger economy.
“Conservatives know that when people move, spend and invest, everyone benefits.”
Cleverly added: “Labour’s instinct is always to tax more; ours is to back working people, homebuyers, and the local businesses that keep Britain moving.”
Conservative Member of Parliament for Grantham and Bourne Gareth Davies, said: “We all know that Stamp Duty Land Tax clogs up the gears of aspiration.
“Whether for younger people who wish to achieve the dream of homeownership, families who wish to move elsewhere or to a larger home, or pensioners who wish to downsize, Stamp Duty is a barrier that we need to pull down for good.
“The Adam Smith Institute has been making this case loud and clear. I am proud to stand with them in calling for the Government to abolish Stamp Duty on primary residences once and for all.”
Conservative Member of Parliament for Windsor and Maidenhead Jack Rankin, said: “Stamp Duty represents the worst of Britain’s taxes – it crushes hope for young families, freezes older people into homes they don’t want to live in, and blocks new housebuilding for our children and grandchildren.
“The findings in this research shows the government that abolishing the tax is affordable, helps deliver their own housebuilding goals, and helps hard-working tradespeople get more business.
“As Kemi announced at Conservative Party Conference, we are the Party of sensible, pro-growth economic reforms. I’m very glad the Adam Smith Institute supports us on this tax.”
Mitchell Palmer, economist at the ASI, said: “Stamp duty is one of the most inefficient and backwards taxes in Britain. It punishes people moving towards opportunity and locks people in.
“Abolishing it would get Britain moving again, creating hundreds of thousands of extra housing sales and tens of thousands of new homes each year. All for a modest cost to the Treasury.
“Ahead of the budget, the chancellor needs to show that the government is serious about tackling the housing crisis and unlocking growth by committing to abolishing stamp duty on primary residences.”
