Chancellor Rachel Reeves tomorrow plans to deliver this government’s second Budget, with several property measures rumoured.

These include replacing stamp duty with a property tax for those selling a home worth more than £500,000. Several council tax changes have been floated, including an annual so-called ‘mansion tax’ on expensive properties

But property experts warn that ill-judged changes could suppress transactions and further strain affordability.

Stamp duty reform

With stamp duty raising nearly £14billion last year, debate is intensifying over whether the tax can or should be reformed.

Estate agent and former RICS residential chairman Jeremy Leaf said: “Stamp duty raised £13.9billion in the 2024-25 financial year… But if the Government were to scrap it, as the Tories have promised to, how could that revenue be replaced?”

He suggests shifting the charge from buyers to sellers at a lower rate, such as 0.5% on properties selling for more than £500,00 but admits this hits recent buyers who already paid the tax.

Yopa chief executive Verona Frankish goes further, calling for full abolition: “Stamp duty is an outdated tax that should have been abolished long ago… What the market needs is full, permanent reform – not another temporary stamp duty holiday.”

Council tax

Speculation is mounting that the Budget may introduce new, higher council tax bands for expensive homes.

Leaf warns the consequences could be damaging: “We believe mansion tax ‘dressed up’ as additional higher-value council tax bands is likely to be in the Budget despite the cost and time involved of implementing, as well as the many anomalies remaining. Will the Government allow it to be paid in instalments? Will this give extra income to local councils rather than government? Will this be a downsizing disincentive – will the asset rich/cash poor, especially pensioners and the vulnerable find themselves forced to sell?”

Dave Harris, chief executive at more2life, echoes concerns over the burden on older homeowners.

He said: “A council tax surcharge on homes above £2million, after a band re-evaluation, is being predicted, which would add increased costs for those in bands F to H. Even with an option to defer payment until a move or death, many will still fear such a rise and be worried about how they might fund the increase in costs.”

With inheritance tax bands also expected to remain frozen, he warns many retirees face uncertainty: “When tax bands stay still and values rise, the gap between income and cost grows.”

Some predictions are more caustic. Writing on LinkedIn, R3 Mortgages director Riz Malik said: “Most of us are &*£$ed… I have more faith in a class of primary school children saving this country’s economy than those in power.”

Leaf concludes that tomorrow will be pivotal: “The housing market is at a crossroads – whatever the Chancellor delivers on Wednesday could mean activity reduces further… or we could see a stronger 2026 rebound.”

For now, the industry hopes for what Leaf calls “the least-worst scenario” – one that avoids freezing the market, raising rents or halting construction.