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House price growth in the UK has started to slow down, prompting calls for a reform of property taxes in the upcoming Autumn budget. According to data from lender Nationwide, the average price of a home in the UK saw a 2.1% increase in the year leading up to the end of August. This marks a slowdown from the 2.4% annual growth that was recorded in July.
As reports circulate about a potential overhaul of stamp duty and other property taxes by the government in an effort to generate more revenue and stimulate the housing market, Robert Gardner, chief economist at Nationwide Building Society, emphasized the need for a tax system that enables smoother movement for individuals. Gardner highlighted the importance of examining the UK’s property tax system.
Various options are being considered, such as the introduction of a National Insurance levy for landlords, removal of capital gains tax relief on the sale of more expensive homes, the elimination of stamp duty, and the substitution of council tax with a national property tax. However, opinions amongst experts are divided, with concerns raised about potential losses in tax revenue if stamp duty is replaced.
Nationwide’s data indicates that the average cost of a home in the UK currently stands at £271,079, based on the lender’s mortgage activity. Nonetheless, this figure excludes cash buyers and buy-to-let transactions. While the annual growth rate for August matches that of June, marking the slowest house price growth since July 2024, housing affordability still poses a challenge for many aspiring homeowners, according to Mr. Gardner. Despite the hurdles faced by potential buyers, he noted that there are signs of hope for them in the form of expected cuts in interest rates by the Bank of England, which could alleviate mortgage rates and help incomes surpass house prices
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