Homebuyers could be hit with £2,500 tax rise ‘overnight’, it has been warned, as the Cost of Living crisis continues across the country. Urgent stamp duty reform is needed, experts have warned, as the rules look set to change in a shake-up.

Coventry Building Society is calling for an overhaul of stamp duty which is a levy charged when someone buys a new home. Jonathan Stinton, the head of Mortgage Relations at Coventry Building Society, warned that these pending cuts will pull more Britons into paying stamp duty.

He explained: “The Treasury is taking in huge sums of property taxes while homebuyers are racking up the debt. A stamp duty bill can be thousands of pounds so if people don’t have that amount lying around they’ll probably need to borrow more to cover the tax on their home.

“In seven months’ time the scale is set to tip even more in the Treasury’s favour, with the nil rate band set to halve to £125,000.” Chancellor Rachel Reeves will unveil the new Labour Government’s fiscal agenda during the Autumn Budget on October 30.

“Short term pain for the Chancellor could result in longer term gain for the broader economy,” Stinton added. “Reducing the burden on homebuyers doesn’t have to be too costly for the Treasury either –the Stamp Duty holiday in 2020 and 2021 proved that homebuyers can get a break and tax revenue can remain healthy.

“It may even benefit the economy as people could spend the extra cash on improving their new home, boosting the retail and services sectors and returning some tax revenue through VAT.” So far this year, homebuyers have paid £6.6bn towards the tax, £100m more than the £6.5bn paid over the corresponding period in 2023.

The tax take will increase further once property purchasers have to start paying SDLT again on any property bought for over £125,000 from March 2025.