London could face a £7.5 billion tax increase under a new proportional property tax (PPT) backed by incoming Prime Minister Andy Burnham, according to the Fairer Share Campaign. The levy, which would replace council tax and stamp duty, is designed to be fiscally neutral, meaning the capital would effectively subsidize tax reductions for the rest of the country.
How the Proportional Property Tax Would Work
The PPT would be set at 0.48% of a property's value, with a higher rate of 0.96% for second homes, empty properties, and those owned by foreign nationals. The Fairer Share Campaign's 2021 manifesto estimated that London would contribute £6.5 billion more under the system, a figure now revised to around £7.5 billion due to rising property prices. Hundreds of thousands of Londoners could see their property tax bills rise by £1,000 or more.
For example, the owner of a £700,000 property would pay £3,360 in PPT, roughly equivalent to current council tax levels for that value. However, owners of more expensive homes would pay more, while those with cheaper properties would see reductions, depending on local council tax rates. Any immediate increase would be capped at £1,200.
Regional Impact and Political Backlash
Andrew Dixon, chair of the Fairer Share Campaign, argued that the reform is beneficial for London, stating: "Council Tax is unfair, Stamp Duty is economically damaging, and Londoners pay the price for both. Fair reform means lower bills for low and middle-income households, protection for those facing increases, and a higher contribution from empty, second and overseas-owned homes." He added that it tackles issues Londoners complain about most, such as empty homes and punitive moving costs.
However, the proposal is likely to face significant opposition in London, where property prices are highest and many homeowners have large mortgages. House prices have fallen for nine consecutive months, adding to financial pressures.
Andy Burnham's Stance on Property Tax Reform
Burnham, who is set to become Prime Minister after Sir Keir Starmer's resignation, has long supported land value tax (LVT) and is listed as a backer of the PPT on the Fairer Share Campaign website. In 2010, he said LVT would allow for the abolition of stamp duty, which he called "a tax on the aspiration of young people." More recently, he described council tax as "highly regressive" and called for changes to land, property, and business taxation.
Property experts doubt Burnham will implement such a major reform before the next general election, expected in 2029, but believe it could feature in Labour's manifesto.
