Reports suggest that Andy Burnham is exploring the idea of replacing both council tax and stamp duty with a new annual property tax linked to a home’s value.
Under the reported proposal, the tax burden would shift towards property owners rather than tenants. Homeowners living in their properties could face an annual charge of 0.48% of the property’s value, while landlords, owners of second homes and overseas investors may be subject to a higher rate of 0.96%.
If implemented, the costs could be significant. For example, a landlord owning a property valued at £250,000 could face an annual charge of £2,400. For a property worth £500,000, the yearly bill could increase to £4,800.
The proposal raises important questions about whether landlords would be willing or able to absorb another substantial expense at a time when the private rental sector is already dealing with higher borrowing costs, increased regulation and rising maintenance expenses.
Some landlords may attempt to offset the additional cost through rent increases. However, that option could become more difficult if local authorities are granted greater powers to impose rent controls or rent freezes.
Even in areas without rent restrictions, affordability remains a concern. Many tenants are already facing high housing costs, which could limit the ability of landlords to pass on any additional tax burden through higher rents.
The proposed higher rate for landlords, overseas investors and second-home owners could also influence investment decisions. Some property owners may decide that the financial returns no longer justify the costs, potentially leading them to sell part or all of their portfolios.
There are also concerns about the possible impact on rental supply. If a significant number of landlords choose to leave the market, the number of available rental properties could decline, placing further pressure on housing availability.
A reduction in rental stock could, in turn, contribute to higher rents over the longer term, particularly in areas where demand already exceeds supply.
Supporters of the proposal may argue that a property-value-based tax would create a fairer system than the current council tax structure and could remove the upfront cost associated with stamp duty when buying a home.
Critics, however, may question whether the additional financial burden on landlords and property investors could have unintended consequences for the rental market.
As discussions continue, the debate centres on whether such a tax would create a more balanced property taxation system or whether it could accelerate landlord exits and reduce the availability of rental housing.
The proposal remains under consideration, but it has already sparked considerable discussion among landlords, homeowners and property professionals about its potential impact on the housing market.
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