Published on 23 June 2026
"We see Mr Burnham as a negative for the Prime Central London property market for second home owners, foreign owners and landlords,"
The front page of the Labour Party Manifesto for the 2024 election showed a picture of Sir Keir Starmer and the word "Change" (writes Charles Curran, Principal at PCL estate agency Maskells). An unfortunate picture today as the PM has resigned, leaving the way open for Andy Burnham to take over the Premiership. We see Mr Burnham as a negative for the Prime Central London property market for second home owners, foreign owners and landlords.
Mr Burnham has been vocal about property tax, notably that land is under-taxed and he has vowed to change this. Originally, he spoke about a Land Value Tax in 2010 and this position seems to have now shifted to a more aggressive Proportional Property Tax, which would replace Stamp Duty and Council Tax. The current suggestion is that property is taxed annually at 0.48% of its market value for owner-occupiers and 0.96% for second-home or foreign owners. Notably, in the case of rental properties, this should be paid by the homeowner and not the tenant.
The proposal that Mr Burnham supports originally came from Fairer Share. If this policy were implemented, the initial phase would provide for a transition period for existing primary homeowners where the additional tax would be capped at £1,200 per annum over the current council tax. There is no transition cap proposed for second-home or foreign-owned homes, so they would face the full force of the tax immediately on introduction.
With the removal of SDLT and Council Tax, and after the sale of a property, the proposed taxes would be for a £2m home in Chelsea, £9,600 per year or £24,000 a year for a £5m primary residence. For a second home or foreign-owned home, the figures would be £19,200 and £48,000 respectively.
Importantly, SDLT would be removed so to understand the tax, we would need to offset that up-front payment. SDLT for a £2mn primary house under the current system in Chelsea would be £153,750 and then £3,168 a year in Council tax. Over 10 years the total is £185,430.
"Some flavour as to where Mr Burnham is likely to focus his policies"
Under the system Mr Burnham supports, the tax would be £9,600 a year or £89,430 less than the current system. However, if you own the home for longer, then the benefit disappears and homeowners will pay more.
For second home and foreign buyers, there is no transition and the tax rises considerably and quickly. A £2mn second or foreign owned home would attract a £16,032 charge in the first 12 months.
Whilst this tax is not part of the Labour Manifesto and is unlikely to be implemented before the next election, should Labour win, it gives some flavour as to where Mr Burnham is likely to focus his policies.
He is fully aware, that he must be mindful of the bond market and yet any attempts to curb spending will be met with protests from his backbenchers. He has committed not to increase income tax for “working people” or VAT so any additional spending will have to be from taxes raised elsewhere.
"The removal of SDLT and council tax to be replaced with a 0.48% annual tax is probably not a bad idea"
We believe that lower taxes are essential to stimulate the economy and the removal of SDLT and council tax to be replaced with a 0.48% annual tax is probably not a bad idea. It will however create a real incentive not to sell for those who would benefit from the £100 month transition period which may well cause an initial spike in property prices as domestic vendors, if unable to meet the higher charge, may well end up sitting in their properties even if they are no longer appropriate.
Once this clears (and it may take years) we welcome a removal of the barrier that SDLT is to property ownership. This may well stimulate the economy as people will be able to move around the country for work without having to pay a large transaction tax to buy a home.
"We would also expect to see a large number of foreign owners sell to avoid this tax"
However, we would also expect to see a large number of foreign owners sell to avoid this tax, which may well counter the lack of sales from domestic vendors. If foreign vendors sell in droves, this will outweigh the domestic vendors, then prices will fall, and potentially quite significantly. A £10mn home owned by a foreign or second homeowner would attract £92,832 in annual taxes under this regime or a 2,930% increase over today with no transition period.
We would also be concerned about the private rental market. If Landlords are not to benefit from the transition period, then surely, they will either sell or seek to increase rents accordingly. This may also provide additional stock which will push property prices down and rents up. Lower prices of course mean less tax is collected on property value.
Whilst the current system is by no means perfect, SDLT tax is raised on the transaction, and council tax pays for local services. Whilst it may seem unfair that a high value property in Prime Central London pays the same or less council tax than a home in the country, council tax is a tax for services and not a tax on wealth and the more properties there are in a given borough, the smaller the contribution from each property.
"Tinkering with taxes is dangerous as no-one invests in tax-uncertainty"
For the tax that Mr Burnham supports, we also anticipate a raft of litigation on house prices – we have seen a 24% decline in the PCL market since 2014: a £15mn home for a foreign or second home owner would attract £140,000 a year in tax and if that could be valued at £11.5m, it would save £40,000 a year in tax, which may well be worth the litigation.
Tinkering with taxes is dangerous as no-one invests in tax-uncertainty. May we encourage Fairer Share and Mr Burnham to consider the not only vast resources foreign buyers bring the UK and the benefit that this brings to the economy but also the benefit of a strong Private Rental Market where Landlords are not penalised via further increased taxation.
Read the Article in PrimeResi