Understanding England's Proposed Property Tax Reforms
The Resolution Foundation's recent "Home Economics" report suggests significant changes to England's property tax system. It highlights that London homeowners currently underpay, while homeowners in the North East overpay based on outdated valuations.
These proposed reforms, which include a new proportional property tax, aim to address regional disparities and stimulate the housing market by making property transactions more attractive and equitable.
London's Underpayment and North East's Overpayment
Currently, the property tax system in England heavily favours London. According to the Resolution Foundation, households in London underpaid £3.1 billion in property taxes relative to the value of their homes in 2024-25.
In contrast, by 2030-31, around 85% of households in the North East are projected to overpay an average of £710 annually. This discrepancy is largely due to property valuations still being based on assessments from 1991.
The Proposed Proportional Property Tax
The Foundation has proposed a significant overhaul of the current tax structure. Their suggestion is to implement a proportional tax of approximately 0.7% on the current value of properties, replacing both Council Tax and Stamp Duty.
This proposal aims to eliminate the regional disparities by updating the tax assessments to reflect current market values, thus ensuring fairness across England.
Impact on the Housing Market
The existing Stamp Duty has been identified as a barrier to up to 100,000 transactions annually, hindering economic mobility and growth. The proposed reforms aim to remove such barriers, potentially stimulating the market.
By replacing Stamp Duty and outdated Council Tax, it is hoped that more fluid property transactions will occur, benefiting the overall housing sector and reducing economic inequality between regions.
Where This Leaves Property Buyers
For current and prospective property buyers, particularly in London and the North East, these potential changes could significantly influence property investment decisions. Londoners may face higher taxes reflective of their actual property values, while those in the North East could benefit from reduced overpayment.
If you're considering buying in areas like Inner London, Newcastle, or Durham, staying informed about these potential changes is crucial. It's advisable to monitor official announcements for any updates or enacted reforms.
With Habio, explore listings and area guides to make informed decisions as the property tax landscape evolves. Always check governmental sources for the most current tax rules and rates.
Frequently asked questions
What is the current property tax system in England?
The current system involves Council Tax, based on 1991 valuations, and Stamp Duty. These are seen as outdated, leading to inequalities, especially between London and the North East.
What changes are proposed for the tax system?
The Resolution Foundation proposes a 0.7% proportional property tax on current home values, replacing Council Tax and Stamp Duty to address regional disparities.
How will these proposals affect London homeowners?
London homeowners may pay higher taxes reflective of current property values, addressing the £3.1 billion underpayment identified by the Resolution Foundation.
Sources
- Broken housing taxes mean Londoners are under-paying by £3.1 billion – with the rest of England over-paying in return • Resolution Foundation
- High Value Council Tax Surcharge - GOV.UK
- High Value Property Surcharge risks “confusion, cost and complexity” for councils, warns LGA | Local Government Association
This article is general information, not legal, tax or financial advice. Markets and rules change — verify the current position with official sources before acting. Published 25 September 2026.
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