The specific risks brokers should be tracking
Burnham’s policy programme, as set out in a series of interviews, speeches and policy statements compiled in reporting by The Times this week, contains at least four components that mortgage intermediaries should be watching closely. All of them could materially affect client decisions in the near and medium term.
1. The land value tax
Burnham has long been a supporter of replacing council tax with a land value tax – or, in its most likely practical form, a Proportional Property Tax modelled on proposals by the Fairer Share campaign group. Under this approach, stamp duty and council tax would be abolished, replaced by an annual levy of 0.48 per cent on the current assessed value of the property. Second homes, foreign owners and empty properties would pay a higher rate of 0.96 per cent.
The implications for London and the south-east would be significant. As the Evening Standard’s analysis of the Fairer Share proposals published this week noted, the average London homeowner would pay £260 more per year under the new system – with the city as a whole paying £2.5 billion more. In Kensington and Chelsea, where the average property costs £1.273 million, the annual tax would be £6,110 – against a current council tax bill of £3,287.
Tom Bill, head of UK residential research at Knight Frank, has raised the specific concern that applies to brokers and their clients: annual revaluations, he says, “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 cost and a recurring annual property tax is not trivial, particularly for clients in higher-value markets who are already calibrating whether to upsize, downsize or stay put.