Speculation that the chancellor of the exchequer will scrap stamp duty land tax and introduce a new property tax for homes worth more than £500,000 could create a headache for conveyancers over the next few weeks, a conveyancing chief has warned.

The Guardian  has reported that chancellor Rachel Reeves is exploring the possibility of replacing the stamp duty land tax with a new ‘proportional’ property tax for homes worth more than £500,000.

HM Treasury declined to comment specifically on potential stamp duty reforms. A spokesperson said: ‘As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy – which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn

'We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.’

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However, Mark Slade, chairman of conveyancing specialist Fidler & Pepper and a director on the Conveyancing Association board, said: ‘From my point of view, it's not the potential tax that is the problem, because of course at this stage we have no idea what it might be, but the fact this has been leaked into the public domain. It creates massive uncertainty in the market for property purchases over £500k in the months ahead, not least because the budget isn’t due to be held until the end of October/start of November. The gap between now and then means we could have potential sellers waiting to see what happens, and this could disrupt many existing chains.

‘This is probably a “fishing exercise” on the part of government to gauge reaction to such a change, but even doing this has major consequences. It would have been better to have decided on a strategy and implement it without leaking the idea. By doing it this way, it has the potential to end up being the worst of both worlds.’

Should the chancellor move away from stamp duty, David Bridge, director and head of conveyancing at Kiteleys Solicitors, said care must be taken to ensure people are not effectively paying twice - once when they buy and years later when they sell.

'A proportional tax would also need to address the reality of very different property values across the country, otherwise it risks creating inequality. And it’s not yet clear how such a system would be easier or more efficient to collect than the one we already have,' Bridge added.