THE PROPERTY FILTER TAKE
The numbers are pointing to a regional tax gap: London paid £3.1 billion too little in council tax and stamp duty in 2024-25 relative to its housing value, the Resolution Foundation found.
Under its proposed 0.7% annual property tax, the think tank models 90% of any change in the tax on a let home falling on the landlord, and it finds 80% of London households underpaying by 2030-31.
Consider stress-testing your holding assumptions by region, and you may wish to speak to your accountant before the Budget on 28 October 2026.
London paid £3.1 billion too little in property tax in 2024-25, relative to the value of its homes, according to the Resolution Foundation's Home Economics report (24 September 2026). The figure combines council tax and stamp duty in England. The think tank wants council tax and the main rate of residential stamp duty replaced by a single annual property tax. With the Budget set for 28 October 2026 (HM Treasury), the report asks the Chancellor to set out a reform roadmap.
How big is the gap between London and the rest of England?
The data shows the gap starts with prices. Council tax bills in England still rest on 1991 valuations, the report notes. Since 1995, prices have risen 7.3-fold in Inner London against 4.2-fold in the North East (Resolution Foundation, September 2026).
That divergence feeds straight into tax as a share of home values. In the North East, residential property taxes in 2024-25 were equal to 0.8% of the value of housing, double London's 0.4% (Resolution Foundation). Against a system where that ratio was the same everywhere, London underpaid by £3.1 billion.
But "the rest of England overpays" is not quite the report's finding. It says every other region besides the South East and the East of England overpaid in 2024-25. And if the rest of England had paid at London's low rate, regions outside the capital would have paid £12.3 billion less (Resolution Foundation).
The UK leans on property for revenue more than most. Property taxes raised 3.7% of GDP (gross domestic product, the size of the economy) in 2023, against an OECD average of 2%, the report says. You can see how today's transaction tax adds up on a purchase with our free stamp duty calculator.
Who wins and who loses by 2030-31?
The report projects the split forward to 2030-31, comparing today's system with a proportional property tax (an annual charge set as a fixed share of a home's current value). Across England, 61% of households would be overpaying by an average of £430 a year. Another 36% would be underpaying, by an average of £680 (Resolution Foundation).
The regional extremes are stark. In the North East, 85% of households would be overpaying, with the average overpayment among them at £710 a year. In London, 80% of households would be underpaying, by an average of £950 a year.
Outside the capital, 68% of households would be overpaying in 2030-31, according to the report. It also finds a size effect: by 2030-31, the average effective tax rate on a £100,000 home will be almost three times that on a £1 million home.
What would the proposed 0.7% tax mean for landlords?
The proposal is a revenue-neutral (raising the same total the two current taxes are forecast to raise) tax of 0.7% of a property's value a year. It would replace council tax and the main rate of residential stamp duty in England. Like council tax, the occupier would pay it, with a rebate scheme for poorer households (Resolution Foundation).
For investors, the key line is the report's modelling assumption, not a rule. It assumes 90% of any change in the recurrent tax on a let home falls on the landlord in the long run, through rents. The other 10% falls on the tenant. Lower bills in a cheaper area would, in that model, let rents rise, and higher bills would hold them back.
The report puts it plainly: landlords lose where recurrent taxes on their let properties increase and win where they decrease. If you hold in both, our stress test calculator shows how much rental headroom a deal carries before costs shift.
The proposed timing for rented homes is specific. The new bill would apply when tenants move, or five years after the policy starts, whichever comes sooner. By that final deadline, the report says, advertised rents will have adjusted and tenants in situ can renegotiate with their landlord.
What happens to stamp duty and house prices?
Stamp duty is the harder half. Simply announcing abolition would gum up the market and blow a £15 billion hole in the public finances, the think tank warns (Resolution Foundation press release, 24 September 2026). As a first step, the report floats a commitment, potentially in the 2026 Budget, to freeze rates at current levels for, say, the rest of this Parliament.
It also floats a credit scheme. Recent stamp duty payments could count against future property tax bills, for a time-limited period of perhaps two to five years. Credits would apply only where a homeowner's annual charge rises.
Prices would move in different directions by region, the report estimates. Abolishing stamp duty pushes prices up, most for expensive homes. In London, the South East and the East of England, that gain would cushion a higher annual tax. Elsewhere, where council tax is currently too high, prices would rise as both taxes fall. Overall, the report expects the gap in house prices between areas to narrow.
The proposal covers main homes. The report argues there is a strong case for extra surcharges on second homes and empty properties. Comparing regional strategies across the cycle is worth doing with that in mind.
None of this is government policy. The report's first step is an up-to-date database of property values, which it says will likely take at least two years to build. Whether the Budget on 28 October 2026 starts that work is the next data point to watch.
Key takeaways
London paid £3.1 billion too little in council tax and stamp duty in 2024-25, relative to its housing value, according to the Resolution Foundation.
In 2024-25, property taxes equalled 0.8% of housing value in the North East against 0.4% in London.
By 2030-31, 85% of North East households would overpay by an average of £710 a year, while 80% of London households would underpay by an average of £950.
The think tank proposes a 0.7% annual property tax paid by occupiers, and models 90% of any change on let homes falling on landlords.
The Budget is on 28 October 2026; the report's proposals are not government policy.
Frequently asked questions
What does the £3.1 billion figure measure?
Does every region outside London overpay?
What is the proposed 0.7% property tax?
Would landlords pay the new tax?
Does this apply in Scotland or Wales?
