A think tank has claimed abolishing council tax and stamp duty in London could help ease the capital’s housing crisis.
Rob Anderson, director of research at the Centre for London, said: ‘By every metric that matters, the housing crisis is at its worst.’ With this in mind, the think tank have come up with a way to improve the situation.
The Centre for London said scrapping council tax and stamp duty in London and replacing them with a new annual property wealth tax could encourage homeowners to downsize while also helping renters to save money.
In a report, published earlier this week, the organisation argued the proposed tax could generate funding equivalent to more than 100,000 affordable homes over the next decade.
Previous research by the think tank found that average living space per person in the capital has increased by 30% over the past 20 years.
However, it said this growth has been largely concentrated among higher-income households, with private renters seeing little benefit. The lowest 40% of households by income have experienced just a 6% rise in floor space.
At the same time, housing costs remain a burden, with a lot of young professionals paying over £1,000 a month to rent a room in shared accommodation and lower-income households spending an even larger share of their income on rent.
The proposed system would be based on a proportional property tax linked to home values. Properties worth up to £800,000 would face an average base rate of 0.39%.
Within the report, experts also noted average house prices have risen form around seven times medium earnings in 2002 to 12 times in 2024, nearly doubling in two decades.
Home ownership has also dropped dramatically, with the proportion of owner-occupiers falling from 57% in 1991 to 47% in 2021. Over the same period, the share of private renters increased from 14% to 30%.
The report said more than 75,000 households are now in temporary accommodation in London, including around 50,000 with children. It also estimated that about 13,000 people were sleeping rough between April 2024 and March 2025, a 10% rise year on year and the highest recorded figure.
‘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,’ Anderson said.
‘Removing stamp duty on ordinary movers would release an extra 79,000 homes a year, while raising funds for investment into social and affordable housing.’
Image: Francesco Albertazzi/UnSplash
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