Chancellor considers a new property tax to replace stamp duty

Chancellor Rachel Reeves is exploring a new proportional property tax targeting homes worth over £500k.
This would replace stamp duty for owner-occupied homes, but not for second homes. The tax would be paid upon sale, with rates set by central government and
collected by HMRC.

Officials are also studying a local property tax to potentially replace council tax in the future. This tax reform would likely require Labour to win a second
term, as implementation would take longer. The move aims to tap into the surge in property values and address inequities in the current system, which is based
on 1990s valuations.

It could help raise revenue without breaching Labour’s pledge not to increase taxes on working people. The proposal aligns with calls from within Labour for more
wealth-based taxation.

There has been divided public reaction to these proposals. Many have pointed to regional disparities, arguing that in areas like London and the Southeast, £500k
doesn’t equate to wealth due to high housing costs. They suggest raising the threshold or applying regional adjustments. Some fear middle-class families and
pensioners could be unfairly impacted.

Others support taxing unearned property wealth to address generational inequality. Advocates say it could help rebalance the housing market and target wealth more
effectively. Critics warn of unintended effects like reduced housing mobility and discouraged downsizing. Concerns were also raised about homeowners increasing
asking prices to offset the tax.