The move is a high-profile call to reform property tax, and joins that of the Conservative Party, which has promised to scrap the tax on big houses if re-elected.
The cross-party committee report says stamp duty is an important source of revenue for the public purse and recommends that the government launch a consultation, by the end of 2026, to explore possible alternatives.
The report suggests that stamp duty reform be carried out along with council tax reform, which the committee called for in a previous report on local government finances.
HCLG chair Florence Eshalomi said: “Home ownership prices in England have fallen over the last 20 years. For many people, and particularly those who cannot use the bank of mum and dad, the prospect of owning a home is more than just a pipe dream.
“Reform of the stamp duty is necessary but, especially given the impact on public finances, this cannot be done in isolation or without other credible sources in place.
“We urge the Department of Housing, Communities, and Local Government and HM Treasury to discuss alternatives to stamp duty that can deliver long-term benefits and not a short-term fix that only distorts the housing market and exacerbates the problem of unaffordability.”
The report notes that there are currently hundreds of thousands of vacant properties, many of which have been vacant for months or years. It recommends that they be returned to residential areas to increase supply and reduce housing prices.
The report recommends that the government make it easier for councils to manage empty properties in local authorities, by clarifying councils’ existing powers, and providing new ways to restore long-term empty accommodation.
The report recommends that the government launch a consultation on stamp duty before the end of 2026 to explore possible alternatives to the current tax.
The consultation should consider factors including potential for revenue growth, impact on local market volatility, continuity, and fairness.
Options could include reducing stamp duty, replacing it with another system, adjusting it to local prices or revising aid and exemptions, the committee said.
The committee’s report welcomes the replacement of the Lifetime ISA with a new product that focuses specifically on supporting home ownership but recommends that the product does not include a fixed property price which would make it unsuitable for use in some parts of the country.
Together chief commercial officer Ryan Etchells said: “This morning’s report from the HCLG committee shows that there is a consensus within Whitehall that there is a growing affordability gap for first-time buyers.
“Whether the Government is heeding the advice to change the stamp duty system and replace the Lifetime ISA with a more forgiving product is another question entirely.
“As the report acknowledges, home ownership affordability is being made worse by the housing shortage, which is hampered by the issue of empty homes and the construction of affordable housing.
“But the real key to increasing affordability is creating an environment where private homebuilders can financially justify doing new and viable projects.”
