Proposed seller property tax targets London’s homeowners

Labour’s proposal to replace Stamp Duty Land Tax with a new property tax on home sellers could unfairly burden London homeowners, estate agents Benham and Reeves say.

It warns that the suggested tax, which would apply to properties valued at more than £500,000, would disproportionately affect the capital, where 60% of homes listed for sale exceed this price point.

The firm has carried out research and found that across England, around 30% of properties currently on the market would be subject to the new tax if sold.

In London, however, this figure doubles, with six in 10 homes priced at or above the £500,000 mark.

Tax will hit Londoners

Marc von Grundherr, a director of the firm, said: “The proposal to shift Stamp Duty onto sellers via a property tax on homes above £500,000 may sound like a progressive move at a national level, but in reality, it’s a tax on London, designed to win favour with the nation’s homebuyers at the expense of the capital’s home sellers.

“In the capital, £500,000 does not buy a luxury home; in many areas it’s simply the baseline for an average property.

“By targeting this price bracket, the Treasury risks penalising ordinary London homeowners, while leaving much of the rest of the country largely untouched.”

He added: “If the government truly wants to create a fairer system, it must consider the significant regional variations in property values.

“Otherwise, this reform will not rebalance the housing market, it will simply add another barrier to selling in London at a time when transaction levels remain subdued.”

Most capital areas affected

The research also shows that the South East follows London at a distant second, with 30% of its listings potentially affected, underscoring the capital’s unique exposure.

Chancellor Rachel Reeves is reportedly exploring the tax, which aims to ease costs for buyers but risks placing a heavier load on sellers in high-value regions like London.

The Treasury’s plan would see sellers of properties valued above £500,000 taxed, a move that Benham and Reeves suggest could penalise the capital’s homeowners to appeal to buyers nationwide.

A closer look at London’s boroughs reveals stark disparities, the firm says.

In Kensington and Chelsea, 93.1% of listed properties are over the £500,000 threshold, while Westminster (91.1%) and the City of London (89.5%) are close behind.

Other inner boroughs, including Camden (82.8%), Hammersmith and Fulham (81.0%), Wandsworth (73.2%), Islington (72.3%) and Hackney (71.2%), also face a big impact.

Even outer areas like Richmond upon Thames (69.2%) and Lambeth (62.4%) see most of their homes fall within the taxable range.