Planning and tax reforms could revive UK housing market
As Andy Burnham begins his premiership, RSM UK urges the government to prioritise a review of planning reforms and tax policy to help stimulate the UK’s stagnating housing market.
The latest UK House Price Index showed house prices increased only 0.3% on a non-seasonally adjusted basis from April to May 2026 and were flat on as seasonally adjusted basis. The average UK house price in May 2026 was £271,000, up £7,000 from the previous year and marking a 2.7% annual increase.
These results were driven by a concerning trend in London, where house prices were down 3.7% for the year to May 2026, and dropped 1.2% for the month.
Stacy Eden, National Head of Real Estate at RSM UK said: “The May house price data is unsurprising, highlighting stagnation in the housing market as house prices flatline. This is particularly evident in areas of high house prices such as London, where penal rates of Stamp Duty Land Tax (SDLT) are most keenly felt.
“As Andy Burnham begins his premiership, we’d urge the new prime minister to prioritise a review of planning reforms and tax policy to help stimulate the UK’s stagnating housing market. RSM’s latest Real Estate 360 report showed that, when it came to government incentives to improve housing viability, a third of real estate business leaders (33%) felt that abolishing Stamp Duty could provide a market boost. Over a third (39%) said increasing development costs, which Stamp Duty adds to, are the biggest barrier to meeting government housing targets, while quarter (26%) cited planning challenges.
He added: “Andy Burnham’s premiership may mean a review of Stamp Duty is on the cards, as he has previously expressed his dislike of the tax. However, scrapping Stamp Duty altogether, or replacing it with an alternative, will need some careful thought, as it brings in around £15bn a year in revenue.
“We’d like to see the government revisit current policy to create a fairer and less penal system. Currently buyers are put off moving due to high stamp duty fees, significantly decreasing liquidity and transactions in the market.
“While we recognise some of the issues impacting housing supply are outside of the government’s control, high taxes, long planning processes, and a lack of skilled workers are all currently hampering housing development. Research from the Home Builders Federation (HBF) reveals that £76,000 has been added to the cost of building a home since 2020, of which £30,000 is due to increased regulation and taxation.
“We’d like to see Andy Burnham’s government take a more long-term and holistic approach to planning policy and real estate taxation, which would enable the sector to thrive and improve the viability of developments. Introducing a penal land tax would again be another cost for developers to consider, stymying growth.
“We expect the underlying trend of subdued growth, with declining prices in some areas, to persist over the coming months, particularly as the 10-year gilt rate seems to be edging upwards as concerns around the UK’s fiscal position remain.”