What Investors Should Expect and Why Caution Matters
Speculation around potential property tax changes in the forthcoming Budget has intensified in recent weeks. While the Chancellor’s immediate focus is plugging fiscal gaps, the wider debate has encouraged economists, planners and academics to revisit how the UK taxes property and how those systems shape the market.
From our perspective at Curzon Land, understanding these possible shifts is critical. Tax policy influences not only individual transactions, but investment appetite, long-term land use planning, and the broader delivery of new homes.
Most commentators agree on two points: stamp duty is distorting market liquidity and council tax – still tied to 1991 valuations – is long overdue for substantive reform. The question is how to fix the system without disrupting a fragile market or undermining the conditions needed to meet housing delivery targets.
Stamp Duty: A Growing Drag on Market Mobility
Stamp Duty Land Tax (SDLT) has evolved repeatedly over the past two decades, becoming increasingly progressive to support shifting political priorities. Reliefs for first-time buyers and surcharges for investors have shaped activity at the margins. Yet the biggest structural issue is far simpler: thresholds have barely moved, despite decades of house price growth.
This has created significant fiscal drag. Today, an average homeowner moving up the ladder faces around £12,400 in SDLT – a far cry from the early 1990s, when the levy stood at 1% above £60,000. Even accounting for inflation, that historic bill would equate to roughly £1,900 today.
For households, it has become a major barrier to moving. For the Treasury, however, it is an exceptionally lucrative revenue source, generating over £10 billion in 2024–25 alone. That reliance makes any proposal to replace SDLT with an annual property tax politically and financially challenging.
And any alternative would produce clear winners and losers, from mortgaged households at the upper end of the market to long-term owners asset-rich but income-poor. For those involved in land promotion, development, or strategic acquisitions, uncertainty around SDLT reform risks delayed decisions at precisely the point when supply is already struggling.
Council Tax: A System Frozen in Time
Council Tax adds another layer of complexity. Created after the collapse of the poll tax, it was designed to give local authorities a stable revenue stream and maintain democratic accountability in local budgets. Properties were allocated into one of eight bands based on their estimated value as of April 1991.
The problem? Those valuations have not been updated since Chesney Hawkes (who?) topped the charts.
As a result, geographical disparities that were once considered tolerable have widened into structural inefficiencies. Homes in areas with significant capital growth are often undertaxed relative to their market value, while properties in regions with weaker growth bear a proportionally higher burden.
A full revaluation would be overdue, but the concept of replacing council tax entirely with a universal property tax raises much deeper questions. Taxing homes at a single national rate based on today’s values would shift a substantial portion of the burden onto London and the South East, while producing only marginal reductions elsewhere. For many households, especially in prime and super-prime locations, the impact could be severe whilst the cost of providing services is does not vary from region to region to the same degree.
And the practical challenges are immense. Establishing precise market values for every home in the UK is difficult enough; determining underlying land values with accuracy is near impossible. In theory, such a tax promises fairness. In practice, it risks considerable financial shock.
The Market Cannot Absorb Further Instability
A broad rebalancing of property tax liabilities might satisfy certain ideological arguments, but it risks destabilising an already delicate housing market. High-value buyers are particularly sensitive to additional taxation and this cohort plays a central role in absorbing new supply, driving transactions, and supporting wider market confidence.
For land promoters and developers, instability at the top end of the market can spill downwards, influencing build-out rates, design viability and ultimately the pace at which new homes come forward. At a time when the government is under pressure to boost delivery, any policy that dampens demand must be considered with extreme caution.
The recent budget has brought in (starting 2028 to give the Valuation Office time to gear-up) an additional levy for homes valued at more than £2.0m. In the rest of the country, this figure will sound like an untold fortune but in London, it is a fairly ‘average’ house and the people living there would certainly not consider themselves as being ‘rich’. We have always argued for a different yardstick for properties in London.
Progress, Yes – But Not at the Expense of Stability
There is a clear case for improving how the UK taxes property. Both SDLT and Council Tax would benefit from thoughtful, carefully calibrated reform. But sweeping changes introduced in haste could create more problems than they solve.
For investors, developers and landowners, the priority is clarity and stability – the conditions necessary for long-term planning and investment decisions.
At Curzon Land, we will continue to monitor developments closely and assess how potential tax changes could influence land values, buyer behaviour, and development viability. Whatever direction the Chancellor takes, considered reform will be essential to supporting both a healthy housing market and the government’s broader ambitions for growth and supply.
