The government has been urged to abolish stamp duty and council tax to address the housing crisis in London. A report from the thinktank Centre for London suggests that a levy on property wealth could unlock homes, finance social housing, and assist renters in saving for deposits.
Report Findings
The study reveals that average floor space per person increased by nearly 30% between 2004 and 2023, but this extra space predominantly benefited higher-income owner-occupiers. Households in the top 20% of incomes saw a 27% rise in space owned, while the bottom 40% experienced only a 6% increase. Rob Anderson, director of research at the Centre for London and co-author of the report, stated: "By every metric that matters, the housing crisis is at its worst."
Proposed Reforms
The report recommends scrapping stamp duty and council tax and replacing them with a partly devolved annual proportional property tax (PPT). This new tax could fund 106,000 social and affordable homes over the next decade. Anderson explained: "It is widely acknowledged by economists and politicians from different parties that stamp duty has a disruptive effect on the housing market and both stamp duty and council tax act as an incentive to hold on to property."
Removing stamp duty for ordinary movers—owner-occupiers moving into their primary home—would release an additional 79,000 homes each year while generating funds for social and affordable housing investment. The Centre for London emphasizes that while building more homes is essential, the issue is more complex. Anderson added: "The problem cannot just be understood as a simple shortage in the number of homes. London can build more homes and it must. But if housing policy only focuses on increasing headline supply numbers and beating delivery targets, we risk missing the real problem: a housing system which is not delivering enough homes overall."
