Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property Industry Eye. Read the original article for full details.
Thinktank Calls for Stamp Duty and Council Tax Overhaul
A major housing thinktank, Centre for London, has called for the abolition of stamp duty and council tax, proposing instead a new annual property wealth tax. The group argues that the current system is worsening London’s housing crisis and that a shift to an annual levy linked to housing wealth could improve the use of existing housing stock and generate additional funding for social housing.
According to Centre for London’s report, replacing transaction-based property taxes with an annual property tax could encourage older homeowners to downsize and make it easier for renters to save for a deposit by reducing upfront moving costs. The report highlights that, despite an increase in average living space for Londoners over the past two decades, there is growing inequality in housing space across the capital. Households in the top 20% of income brackets have seen their space rise by 27% since 2004, compared to just 6% among the bottom 40% of earners.
The thinktank links this imbalance to wider structural problems in London’s housing market, including rising property wealth among higher-income households, affordability pressures, record levels of temporary accommodation, and homelessness costs estimated at £5.5 million per day.
The proposed reforms would see stamp duty and council tax replaced with a partly devolved annual proportional property tax (PPT), which the report suggests could fund 106,000 social and affordable homes over the next decade. Under the proposal, homeowners with the largest and most expensive properties would pay the most tax.
The removal of stamp duty is noted as likely to be viewed positively by property owners and prospective buyers, as it could encourage market movement and downsizing. However, the report also notes that the headline benefits may not fully reflect how the market will respond in practice. The report raises questions about whether the proposed tax could replace the revenue currently generated by both stamp duty and council tax, and highlights the importance of consistent and regularly updated property valuations for the new system.
For letting agents and inventory clerks, these proposed changes could impact the dynamics of the London property market, potentially affecting transaction volumes, property management, and the demand for rental properties.
Source: Property Industry Eye