Andy Burnham, the newly elected Labour MP for Makerfield, is backing a proposed annual property tax of £860 for a 'typical' home in England as part of his bid to become Prime Minister. The plan would replace the current council tax system with a charge equivalent to 0.48% of a property's value.
How the Tax Would Work
Under the proposed shake-up, homeowners would pay an annual charge of 0.48% of their property's value. Second homes, empty properties, and homes owned by overseas buyers would face a higher rate of 0.96%. For a £250,000 home, the annual charge would be £1,200, while a £1 million property would incur a £4,800 charge. The impact would vary significantly across the country due to regional house price differences.
Regional Variations
Based on average house prices published by the Office for National Statistics, a typical home in the North East and North West of England would incur an annual charge of around £860. In contrast, a typical London home would face a charge of approximately £2,700, reflecting the capital's higher property values.
Industry Reaction
Jeremy Leaf, a North London estate agent and former RICS Residential Chairman, commented on the proposal: “Recent history includes many attempts at trying to capture ‘windfall’ increases in land value partly attributable at least to public investment and/or planning, although sadly most have failed. In our view, the hardest nut to crack is arguably setting the tax at a rate which does not discourage development while at the same time incentivising the release of further opportunities.”
Leaf added: “Andy Burnham’s latest bid is laudable but doesn’t seem to have been well thought through as far as its likely impact on the operation of the market is concerned. Assessing realistic value of land and buildings, particularly without the benefit of planning consent to establish tax liability, will not be straightforward either. But that’s not to say the idea is without merit. If the proposal can be properly considered, and tax set at an appropriate level coinciding with additional improvements in planning processes and delivery, then real benefits for all could be the outcome.”
Potential Impact on Homeowners
The proposed tax would represent a significant shift from the current council tax system, which is based on property bands from 1991 valuations. Under the new system, homeowners would see their annual bills rise or fall depending on local house prices. The policy aims to create a fairer system that captures increases in land value resulting from public investment.
