London Think Tank Proposes Annual Property Tax to Replace Stamp Duty and Council Tax

A report by the Centre for London recommends replacing stamp duty and council tax with an annual proportional property tax to address housing supply and affordability issues in the city. 39 per cent on homes up to £800,000. 2 per cent for every £200,000 up to £5 million.

Under the plan, a band D home in Greenwich valued at £500,000 would incur an annual charge of £1,950. This would save more than £15,000 over the first ten years compared with current stamp duty payments. Renters would no longer pay council tax, saving the typical renter £1,890 per year. The Centre for London estimates the reform could fund 106,000 affordable homes over the next decade.

The research found average floor space per person in London has risen nearly 30 per cent over the past 20 years. Households in the top 20 per cent of incomes gained 27 per cent more space, while the bottom 40 per cent gained 6 per cent. House prices stand at 12 times earnings and have increased more than 200 per cent since 2002.

A record number of Londoners currently live in temporary accommodation. Rob Anderson, director of research at the Centre for London, said the changes would release an extra 79,000 homes a year by removing stamp duty on owner-occupiers moving into primary residences.