Andy Burnham’s team is reportedly examining proposals from cross-party property tax campaign group Fairer Share that would replace Council Tax and Stamp Duty with a new annual levy.

The proposals, which could form the basis of a wider overhaul of property taxation, would see homeowners pay an annual charge equivalent to 0.48% of a property’s value. Second homes, empty properties and homes owned by overseas buyers would pay 0.96%.

The owner of a £250,000 home would have to pay an annual charge of £1,200, while a £1m homeowner would pay £4,800, although the impact would vary significantly across the country.

Based on average house prices published by the Office for National Statistics, a typical home in Newcastle would incur an annual charge of around £860, compared with about £1,300 in Manchester and almost £2,700 in London.

Everyone pays the same percentage of tax on the value of their property.”

Fairer Share says 18 million households would pay less under the system and argues it would “put fairness back into the tax system by ensuring everyone pays the same percentage of tax on the value of their property”.

It also claims reforms would support “levelling up and regional rebalancing” while removing barriers to moving home created by Stamp Duty.

Burnham has previously described Council Tax as “highly regressive” and said he has “long been persuaded of the argument for a Land Value Tax“, according to the Mail.

If he follows Fairer Share’s recommendations, he may well base levy valuations on land rather than property values.

Critics, however, have raised concerns about the impact on higher-value markets and asset-rich but cash-poor homeowners. Amy Reynolds, Head of Sales at Antony Roberts, warns that while “the principle is sound”, she fears “the execution will be catastrophic”.

Knight Frank’s Tom Bill says annual revaluations would turn house price growth into “an ongoing tax liability”.

Industry reaction

Tom Bill, Head of UK Residential Research at Knight Frank, says: “The simplicity of the proposal is commendable, but a plan with the sole aim of maximising tax revenue would be preferable to one that continued to politicise the housing market by targeting landlords, developers, overseas buyers or second-home owners. A similar approach with stamp duty in recent years has not exactly breathed life into the market, especially in the sort of higher-value areas where most revenue is presumably being targeted.

“At a time when many landlords are struggling to make things stack up financially, any further disincentive is likely to result in less stock and higher rents, which hurts tenants. The idea that developers would rather sit on land than build houses for a profit feels like an unwise assumption.

“Annual revaluations will turn house price growth into an ongoing tax liability, which would inevitably affect decision-making. The psychological difference between a one-off stamp duty bill and a recurring tax charge means up-sizers could think twice, particularly in London and the south-east where payments are likely to be a proportionately larger share of income.

“Valuing homes on a terraced suburban street using a drone or other technology is much less complex than doing the same thing in prime London locations, where properties are more unique, meaning valuations could be subject to legal challenge.

“The concept of taxing the asset rather than the transaction is sensible as it would improve social and economic mobility, generate tax revenue in other areas like VAT, get rid of a universally disliked tax and ultimately generate a more stable flow of revenue. However, cross-party support or not, proposals should feel politically neutral to avoid replicating the unintended consequences seen with stamp duty changes in the last decade by ensuring a liquid property market that raises as much for the Exchequer as possible, irrespective of your postcode, which would be a real break from the past.”

Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “Andy Burnham’s proposal for a Land Value Tax has got the property industry talking, and rightly so.

“A Land Value Tax is charged on the unimproved value of land itself, not on the buildings or improvements constructed on it. Burnham has argued that land in the UK is under-taxed, pointing to large tracts of unused land where there is currently no meaningful charge on plots left idle without development. The Fairer Share campaign, which Burnham has backed, calls for replacing stamp duty and council tax with a 0.48% proportional property tax.

“Would I like Stamp Duty to go? Yes of course. It prevents liquidity in the property market and it’s an incredibly unfair tax. You pay tax on your income and then pay an absolutely enormous sum of money just to buy a terraced house, because it happens to be in London.

“Stamp Duty prevents downsizers from moving and stops first-time buyers from getting started, leaving them paying extortionate rents – made worse now by the mass exodus of landlords. In theory, a tax that encouraged efficient land use and abolished stamp duty sounds like a good thing. Council tax is equally outdated and completely disproportionate – based on valuations from 1991. Working and living in the Richmond Borough, one of the country’s most expensive council tax areas, right next door to Wandsworth, one of the cheapest, means this is a tax we are constantly aware of. A tax with no basis in fairness simply isn’t defensible.

“The problem with Andy Burnham’s LVT is London and the South East. Homes in these regions have seen rapidly rising values, meaning a land value tax could lead to soaring bills for millions of families. A family in Richmond who bought 20 years ago and is asset-rich but income-modest could face a bill that bears no relationship to what they can actually afford to pay each year.

“The principle is sound but I fear the execution will be catastrophic. Without the full detail – which does not yet exist – this risks becoming a political raid on London wealth dressed up as northern levelling-up. We deserve to understand the real impact before any rules change.”

Jeremy Leaf, North London estate agent and former RICS Residential Chairman, says: “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.

“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.”