Andy Burnham tax plans: Fears over £7.5 billion property levy bombshell for London

Andy Burnham was heading to No10 having previously backed a new property tax which could land London with a £7.5 billion higher bill.He was due to take over as Prime Minister on Monday after Sir Keir Starmer was forced to resign by a Labour revolt.Andy Burnham was the only candidate to get the required support to replace Sir Keir Starmer as Labour leaderPA WireThe new levy would be based on 0.48% of the value of a property, or 0.96% for second homes, empty properties and those owned by foreign nationals.“If you live outside London...your community will benefit from an overall £6.5billion reduction in property taxes, representing a huge boost to local economies,” the campaign states in its manifesto published in 2021.The new tax proposal is fiscally neutral so London would fund the benefits to other regions and the updated £6.5billion figure is estimated to be around £7.5billion now. Given that only London would pay more under the reforms, they are likely to face significant opposition in the capital.Read MoreThe campaign estimates that the owner of a £700,000 property would pay £3,360 in PPT and that is around the same level of council tax for a property of that value.Owners of more expensive properties would end up paying more in property tax with a PPT, and those with homes worth less would see their bill fall, though, this depends on the level of council tax which varies significantly across London.These figures do not take into account the benefits of an end to stamp duty.Any rise in property tax, if the PPT was introduced, would initially be limited to £1,200. The campaign says around £5 billion would be raised from the 0.96% levy on second homes, those owned by foreign nationals and empty housing, with the bulk of this coming from London.London would be hardest hit by a new property taxPA ArchiveAndrew Dixon, chair of the campaign, told The Standard: “Council Tax is unfair, Stamp Duty is economically damaging, and Londoners pay the price for both.“Fair reform means lower bills for low and middle-income households, protection for those facing increases, and a higher contribution from empty, second and overseas-owned homes.”He sought to argue: “This is a pro-London reform because it tackles the parts of the property market that Londoners complain about most: empty homes, speculative ownership, punitive moving costs and unfair Council Tax bills.”However, if a PPT was brought in it is likely to face a major backlash in London given so many people in the capital would see their property bills rise.Many Londoners have large mortgages given the high cost of property in the capital.Property prices are highest in LondonPA WireHe is listed as a supporter on the Fairer Share Campaign website.In 2010 when he first attempted to become Labour leader, he said: “The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty - a tax on the aspiration of young people to put down roots and get on with life.”More recently, he has repeated his calls for reform. “I’ve long been persuaded of the argument for a Land Value Tax,” he said. “[Council tax] is a highly regressive tax. I see a big case for land and property and business taxation to be changed.”Property experts doubt that Mr Burnham would push ahead with such a major reform before the next general election, expected in 2029, but believe it could form part of Labour’s manifesto.