‘We paid £80,000 in stamp duty – we can’t take any more property taxes’

Valerie Jones and her husband spent £80,000 on stamp duty when they bought a family home in Studham, a small, scenic village in the Chilterns, a few years ago. Now they are worried that further crippling property taxes might be coming down the line.

The retirees already have to shell out thousands in council tax each year, and fear that the costs associated with their property would dramatically rise under policies that have reportedly been mulled over by Andy Burnham’s new Government.

It was suggested that the Prime Minister was considering a major property tax overhaul, potentially scrapping council tax and stamp duty in favour of either a land value tax, based on the value of the land itself, or a 0.48pc annual tax proportionate to the property value.

For homeowners like Jones, the substantial bill has affected her and her husband’s retirement plans, and put a greater squeeze on their finances as they try to balance supporting their children and elderly parents.

On top of this, she is worried about how the prospect of further taxes could hit their lifestyle.

“If I’ve got to pay another £2,500 a year – for nothing as far as I’m concerned – that is a holiday that I won’t have, or maybe I won’t change my car,” says Jones, 65.

Speaking earlier this week, the Prime Minister failed to rule out future changes to the way homes are taxed. “It’s just not the case that we are bringing forward plans on that scale at this moment in time,” he said.

However, it remains unclear whether homeowners who recently coughed up a substantial stamp duty sum would be spared from immediately higher levies on their homes if things were to change.

Jones and her husband previously earned well, but no longer have the generous incomes that afforded them their home.

“We worked really, really hard. My husband left school at 16 and worked every day of his life. I had a very good career before I had children and we have always been workers. We’ve given our share, so to keep coming up with new taxes is just plain wrong,” she adds.

Another homeowner, Andrew, who did not want to give his surname, paid more than £150,000 in stamp duty when he bought his £2m home in Weybridge, Surrey, in 2021. The 64-year-old says throwing a new tax on top would shatter an implicit agreement that was made when he purchased the property.

“I can afford to live in that house and retire in it because I sort of understand what the cost structure will be,” he says.

“When you’ve just paid all that money in stamp duty on a presumption that the model works in a particular way, it would be doubly frustrating because if [the new tax] was going to be say £20,000 a year, the decision would be to leave.”

Burnham is now also facing calls to cut stamp duty for over-65s to encourage them to sell larger family homes and downsize. According to a new report from think tank Radix Big Tent’s housing commission, expanding the stamp duty relief to pensioners could bring up to 870,000 family homes on the market.

Andrew fears that if No 10 did row back on its decision to rule out a property tax, it would disproportionately hit the top end of the property market, forcing him to act decisively.

“I would probably have to think quite quickly about selling the house,” he says, adding that he would inevitably look at emigrating.

Amid suggestions that the threshold to pay mansion tax could be reduced, Jones and her husband reneged on plans to buy a modest field next door to their house. With the lofty values of homes in the south of England, a lower mansion tax would absorb their house and new plot.

“That’s because we’re living in the South. If we lived in the North, it would be absolutely fine. We could have this for half the price,” Jones says.

However, she admits she would have fewer concerns with handing over higher taxes if the Government used them more efficiently. “I wouldn’t mind if they were being spent well, but I have no faith in that.”

During his Makerfield by-election campaign, Burnham said he had “long been persuaded of the argument for a land value tax”, and had previously referred to it as “aspirational socialism”.

Dan Neidle, founder of Tax Policy Associates and a former tax lawyer, says people who purchased property recently would need to have their stamp duty outlay credited against land value tax. Without this kind of discount, he says: “People would be furious, and I think they would be right. It would be a desperately unfair result.”

Gabrielle Teare, a long-time personal stylist, thinks that the system is flawed, and fears changes in the future. “It’s just massively unfair because you can’t plan for it,” she says.

Teare’s property in Kensington, which she has owned since 2000, is accompanied by hefty service charges and what she sees as a higher cost of living in London.

Much like many people who have owned their home for decades, she has become “asset rich but cash poor”, she explains, which would make paying a set percentage of her property value each year a challenge.

Teare says that people who live in upmarket areas like Kensington already have “massive mortgages” and school fees to think about, and that she is witnessing an exodus as the threat of further taxes hangs heavy.

“Thirty of my friends have left and they’re all the top 1pc of earners. Who is going to pay the tax if you keep hitting the top 1pc? They’ll just go. We’re all being taxed to the eyeballs with nothing to show for it.”