The move is the most high-profile call to reform the property tax, and joins those of the Conservative Party, which has pledged to axe the tax on main homes if reelected.

The cross-party committee report states that stamp duty is a valuable source of revenue for public finances and recommends the government launch a consultation, by the end of 2026, to examine potential alternatives.

The report recommends that stamp duty reform takes place alongside a reform of council tax, which the committee called for in a previous report on local government finance.

HCLG chair Florence Eshalomi said: “Rates of home ownership in England have declined over the last 20 years. For many people, and especially for those unable to draw upon the bank of Mum and Dad, the prospect of owning a home is little more than a pipe dream. No silver bullet exists but the government can apply a range of supply and demand-side measures to help people get on the property ladder.

“Reform of stamp duty is necessary but, especially given the public finance implications, this cannot be done in isolation or without a credible alternative in place.

“We urge the Ministry of Housing, Communities, and Local Government and HM Treasury to consult on alternatives to stamp duty that can deliver long-term benefit and not a short-term fix which only distorts the housing market and exacerbates the affordability problem.”

The report notes there are hundreds of thousands of residential properties that are currently empty, many of which have been empty for many months or years. It recommends bringing them back into residential use to boost supply and cut house prices.

The report recommends the government make it easier for councils to take control of empty properties in their local authorities, by clarifying councils’ existing powers, and providing new options to recover long-term empty residential properties.

The report recommends the government launch a stamp duty consultation before the end of 2026 into potential alternatives to the current tax.

The consultation should consider factors including revenue-raising power, impact on friction in the property market, progressiveness, and fairness.

Options could include cutting stamp duty rates, replacing it with an alternative system, adjusting it to local property prices or an update to reliefs and exemptions, the committee said.

The committee’s report welcomes the replacement of the Lifetime ISA with a new product focussed specifically on supporting homeownership but recommends the product does not include a static property price cap which would make it unusable in some parts of the country.

Together chief commercial officer Ryan Etchells said: “This morning’s report fromthe HCLG committee shows that there is at least an understanding within Whitehall that there is a widening gap in affordability for first-time-buyers.

“Whether the Government heeds the advice on reforming the stamp duty system and replacing the Lifetime ISA  with a more forgiving product is another question altogether.

“As the report acknowledges, home-ownership affordability is being made worse by a dwindling housing stock, impeded both by the issue of empty homes as well as lacklustre housebuilding. Reform to stamp duty and the LISA would go some way to giving prospective buyers a helping hand onto the market.

“However the real key to increasing affordability is creating an environment where private housebuilders can financially justify actioning new and viable projects.”