Market activity could suffer further without growth to offset increased taxation, he also warns
Chancellor Rachel Reeves faces a difficult balancing act in attempting to meet Labour's pre-election commitments while simultaneously addressing the nation's financial shortfall. Property taxes may prove unavoidable, according to one industry veteran.
"If the Chancellor is determined to stick to the Labour Party's manifesto pledge not to raise VAT, income tax or National Insurance, then property taxes must fill more of the economy's 'black hole'," said Jeremy Leaf, estate agent at his north London practice. "However, an ambitious, housebuilding-led, recovery is unlikely without realistic growth prospects."
Leaf, also a former RICS residential chairman, warned that additional levies on property could undermine buyer and seller confidence in the wider economy. "Further property taxes may be politically easy to introduce but may compromise confidence in the economy, which is a worry as housing constitutes 6% of GDP and is a significant consumer spending and confidence driver," he said.
The veteran industry commentator advocates for a multifaceted approach to tackling the UK's housing shortage, encompassing improved planning processes, fuller utilisation of existing housing stock through retrofitting and conversion schemes, and targeted support for social housing providers.
He pointed out that stamp duty collected £13.9 billion during the 2024-25 financial year while affecting 83% of transactions, thereby penalising mobility. He suggested an alternative model whereby sellers rather than buyers bear the charge, potentially at a reduced rate applicable only to properties exceeding £500,000.
On first-time buyer support, Leaf said he supports schemes comparable to Help to Buy or deposit assistance, provided such measures do not inflate property prices by increasing demand without corresponding increases in supply.
Regarding council tax reform, he expressed scepticism about proposals to introduce higher bands for expensive properties, often termed a "mansion tax". He raises concerns about implementation costs, potential legal disputes, and the implications for asset-rich but cash-poor householders, particularly older people.
"A mansion tax could be self-defeating as it is likely to be payable annually and not transaction based like stamp duty and capital gains tax," Leaf said. "It's also a post-tax cost so, for example, a 1% charge at £2 million could mean 1.8% for higher-rate taxpayers i.e. £36,000 not £20,000. Also, if it is a 'slab' tax, owners of homes valued at £1.99 million might pay nothing, so huge conflicts are likely."
According to Leaf, the most pressing consideration for policymakers involves the potential effect of any fiscal changes on transaction volumes and the wider economic environment. He maintained that tax certainty itself offers benefits to the market, notwithstanding the specific measures ultimately announced.
"The housing market is at a crossroads – whatever the Chancellor delivers on Wednesday could mean activity reduces further, or if it is not as bad as rumours have suggested, we could see a stronger 2026 rebound as the market recovers," he said.
"At least we will have tax clarity, which is better for the market than the current situation we find ourselves in. On balance, we are hoping for the least-worst scenario which doesn't compromise activity, raise rents or stop building."
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