Propertymark says the new tax “must be carefully considered, fit for future purpose, and encourage the concept of homeownership for those who aspire to it”.

It highlights that any revised system must assist first-time buyers, second steppers and those looking to right size. 

Propertymark head of policy and campaign Timothy Douglas welcomes discussions around reforming stamp duty as he says it’s a significant barrier to moving and getting people on the housing ladder.

“Economic growth can come from reducing the financial burden of stamp duty which we know increases the number of transactions, but any changes must work alongside differing property prices and the dynamic nature of our housing markets across the country.”

However, ASK Partners chief executive and co-founder Daniel Austin says the new plans are a “short-term fix” that would “do little to close the gap in public finances, stabilise the property market or support long-term economic resilience and growth”.

Austin argues: “If implemented, the tax risks creating an artificial ceiling on many properties around the £500,000 threshold.

“While this may seem like a positive development amid the current housing crisis, most first-time buyers do not enter the market at this level, and because housing operates in an upward chain, the impact would reverberate across all price points.”

“In London, where the average home now costs nearly £700,000, the measure would hit families hardest, incentivising sellers to increase prices further in order to absorb the tax burden.”

Although Austin believes the government is right to review the current system, he says “the solution is not more taxes — it is building more homes to increase supply and unlock market mobility” – a point he made in a letter he recently sent to the Chancellor. 

Senior ministers have been informed about the proposals ahead of the next Autumn Budget, as Chancellor Rachel Reeves anticipates that tax increases will be needed to bring in additional revenue.

Officials will start with examining a potential national property tax, which would look to replace stamp duty on owner-occupied homes.

In addition, they will look at whether a local property tax could then replace council tax in the medium term, with the aim of helping local authority finances.

While a national tax could be implemented during this parliament, it is understood that a complete overhaul of the current council tax structure could take a longer period of time.

The new national tax would be paid by owner-occupiers on homes worth more than £500,000 when it goes to sale.

The total sum would vary and be determined by the value of the property based on the rate set by the central government. The government would collect the proceeds through HM Revenue and Customs.

However, it has been said the new tax would not replace stamp duty on second homes.

A range of options are being proposed for its implementation but it is likely to be a phased in approach.

Rics residential chairman Jeremy Leaf explains: “In any event the council tax system needs revising because there are so many anomalies but the cost of doing so and the time involved would be prohibitive.”

“There are lots of issues with regard to values and type of property in the present system – for example, residents in some areas may pay relatively less than others even though their properties are now much more valuable because council tax was set at a time before gentrification or other improvements.”

But Leaf highlights: “It’s all about optics — it is not just about introducing another tax, a separate tax would have to be consulted on, would take time to badge and produce – so the easiest way to increase revenue would be to raise council tax. But it all depends on how much needs to be raised and whether more structural changes take place.”

 While, Leaf says he is “very much in favour” of incorporating this tax as a substitute for stamp duty, he also notes that “we are trying to encourage growth; as a country, we want to see improved job and social mobility. Stamp duty stops that, particularly among those on the margins, such as first-time buyers, as it is such a big investment.”

 “We can see the advantage in taking tax from people who have benefited from an increase in property values but the fear is that it is going to impact the vulnerable in particular. Those of retirement age, say in their late sixties, might be able to move into a flat or bungalow (should they be able to find a suitable one) with not too much of an issue.”

“But for those more on the margins, say in their early eighties, who are not so mobile and don’t want to move out of an area where they have lived comfortably for many years near family and friends — why should they have to move some distance where property prices happen to be cheaper?”

“We understand the issue of right sizing and getting people in the right properties as far as possible but forcing people to downsize, particularly the most vulnerable and compromised, must be avoided.”

The latest figures show that stamp duty receipts for April to June this year totalled £4.6bn. In June alone, buyers paid £1.1bn, a 15% increase from the £918m paid in May.

In total, homebuyers paid £6.6bn in stamp duty throughout the first six months of the year, a 21% increase on the £5.4bn paid in the same period last year.

Since April this year, buyers had to start paying stamp duty on properties purchased over £125,000 – after the nil rate threshold dropped from £250,000 on 1 April.

It was reported that the new proposals would affect around a fifth of property sales, compared with about 60% with current levels of stamp duty.

Earlier today, the Office for National Statistics reported that average UK house prices increased by 3.7% to £269,000 in the year to the end of June.

Quilter financial planner Thomas Lambert pointed out that alongside other factors policy noise was adding further uncertainty with the Treasury considering taxing gains on primary residences above a high threshold or introducing new levies on expensive homes.

Lambert said: “If these rumours do materialise at the Autumn Budget brings, transactions could seize up through the winter as sellers consider sitting on their hands hoping that another government might reverse the changes.”

“That would risk even tighter supply and, paradoxically, could push prices higher by intensifying competition, compounding problems for first-time buyers.”

Birketts LLP head of corporate tax Karl Pocock also comments, suggesting that changes to stamp duty rates and relief can have a “a short to medium-term impact on house prices and market momentum”. 

“Having multiple regimes that could apply to the sale and purchase of residential property risks increased complexity and creating markets within markets.”

“Any changes should stimulate the market in a sustainable fashion; allowing more people to own their own property while ensuring that selling your own home does not become so expensive that sales reduce materially.”

With stamp duty being a barrier to movement, Rightmove property expert Colleen Babcock states that the platform recently called for an increase to the zero rate thresholds at which first-time buyers and home-movers start paying stamp duty.

It also backed a suggestion from one of its agent partners that stamp duty should be paid over a longer time period. 

Babcock states: “If changes are brought in that make home-moving genuinely more affordable for people then we would welcome them, but without firm details it remains to be seen if a different type of taxation would leave property owners better or worse off in the long run.”