Andy Burnham, the Greater Manchester Mayor and incoming Prime Minister, has backed a proportional property tax (PPT) that could impose a £7.5 billion annual bill on London homeowners. The proposed tax, developed by the Fairer Share campaign, would replace council tax and stamp duty, applying a 0.48% levy on property values, or 0.96% for second homes, empty properties, and those owned by foreign nationals.
London Boroughs Face Varying Impacts
According to Fairer Share analysis, a majority of households in over 20 London boroughs would see higher property tax bills under the PPT. Only four boroughs would see a majority of households benefit: Barking and Dagenham (58%), Islington and Southwark (52% each), and Hackney (51%). Croydon would see 50% of households benefit. Westminster would be hardest hit, with just 12% of households gaining, while Wandsworth would see only 23% benefit. In Kensington and Chelsea, 28% would benefit, followed by Barnet (31%), Merton (32%), and Hillingdon (33%).
Regional Disparities and Renters
Andrew Dixon, chairman of the Fairer Share campaign, told The Standard: "This isn't just sort of the regions versus London. This is London versus London itself, actually, because you will find many nurses, teachers, those working in the public sector often end up paying more council tax than those living in £20 million mansions in Westminster." Renters would not pay the PPT directly, but landlords are likely to pass on at least part of the cost. The campaign estimates that around £5 billion would be raised from the 0.96% levy on second homes, foreign-owned properties, and empty housing, with the bulk coming from London.
Tax Cap and Transition
Any increase in property tax under the PPT would initially be capped at £1,200 per year, but this cap would disappear once a property is sold. The campaign estimates that the owner of a £700,000 property would pay £3,360 in PPT, roughly equivalent to current council tax for that value. Owners of more expensive properties would pay more, while those with cheaper homes would see their bills fall, depending on existing council tax levels.
Broader Tax Context
Burnham has suggested that raising taxes will not be an imminent step when he takes over from Sir Keir Starmer as Prime Minister on Monday, but he has not ruled out a wealth tax, which would hit London particularly hard. The average house price in London was £533,000 as of April 2024, according to the Office for National Statistics, with flats averaging £431,000. House prices in the capital have fallen for nine consecutive months, and many Londoners carry large mortgages due to high property costs.
