As the bells rang out across Cambridge on a warm August evening, a crowd of mostly over-sixties filed into a conference room for the Cambridge Conservative Party’s annual general meeting. The event, described by Tom Collins in his August 20, 2025 commentary as the social highlight of the season, crackled with unease. The air was thick not just with midsummer heat, but with political anxiety and a sense that the ground was shifting beneath the feet of Britain’s traditional parties and property owners alike.
The local mood echoed national tremors. Councillor Anna Bailey, deputy to the city’s new Tory mayor Paul Bristow, defended a record of 12 years without a council tax hike in Cambridgeshire. But she lamented how a coalition of Labour, Liberal Democrat, and Reform councillors had recently swept in, raising taxes, cutting the council’s working week to four days, and granting themselves an 11 percent pay rise. Bailey’s frustration was palpable, her voice at times cracking as she described how years of fiscal restraint were being swiftly undone by what she saw as political opportunism.
Yet, fiscal discipline is only one side of the story. Nationally, the mood is equally tense. According to Collins, Anthony Browne, a former minister, painted an even bleaker picture: over one million immigrants have moved to Britain to claim universal credit, and a staggering one in four Britons—about 17 million people—now claim some form of disability benefit. The Labour government, having inherited the highest tax levels since 1948, has pushed taxes up by another £40 billion and increased borrowing to £151 billion in 2025. The cost of servicing the national debt alone has soared to £105 billion a year, outstripping spending on defense, education, and policing combined.
Amid this fiscal tightrope walk, the government is reportedly considering one of the most significant property tax overhauls in decades. As reported by The Guardian and covered in detail by iNews, Treasury officials have been tasked with modeling a new national levy on homes valued over £500,000. This measure could eventually replace stamp duty on most sales and, in time, pave the way for the abolition of council tax—a move with seismic implications for homeowners and local authorities across the country.
Stamp duty, long maligned as a transaction tax that distorts the housing market, currently covers about 60 percent of property transactions and generated £11.6 billion last year. Critics say it discourages people from moving, penalizes first-time buyers, and reduces mobility for older owners looking to downsize. The proposed new tax would instead apply only to owner-occupiers selling homes valued above £500,000—affecting around 20 percent of transactions. Second homes would remain subject to the existing 5 percent surcharge, but would not face the new levy. The rates would be set nationally and collected by HMRC, with the aim of providing a more stable and predictable revenue stream for public services.
But the changes don’t stop there. Ministers are also weighing whether to scrap council tax entirely, a system introduced in 1993 and still based on 1991 property values. The Institute for Fiscal Studies has described council tax as “flawed and out of date.” A report for the think tank Onward, authored by Leunig in 2023, suggested replacing council tax with an annual property levy directly linked to house value. Under this model, households would pay 0.44 percent on the value between £80,000 and £500,000 (capped at £2,196 per year), plus 0.54 percent on the portion above £500,000. Homes worth over £1 million would face an additional 0.81 percent charge on the value above that threshold.
For example, a family living in a £650,000 property would pay the maximum £2,196 to their local authority, plus another £810 to the Treasury, totaling £3,006 annually. Unlike stamp duty, this would be an ongoing annual charge, not a one-off payment at the point of purchase. To soften the blow, Leunig proposed that only those buying after the introduction of the system would be liable, sparing existing homeowners from retrospective charges.
The potential winners and losers of these reforms are already clear. Buyers in cheaper regions would benefit from the removal of upfront stamp duty costs and could see their council tax bills fall sharply. Conversely, owners of high-value properties—especially in London and the South East—would face much steeper annual charges. For a household with a £1.5 million home, the new system could mean thousands of pounds more each year compared to the current council tax regime.
The political stakes are high. The government is under intense fiscal pressure, grappling with higher-than-expected borrowing, sluggish growth, and the financial fallout from a recent welfare policy U-turn. Chancellor Rachel Reeves, who has pledged not to raise income tax, national insurance, or VAT, is hunting for new ways to shore up public finances. By focusing on property wealth, the government hopes to raise revenue from those with higher-value homes without hitting working people’s wages—a delicate balancing act with the next Budget looming.
According to a Treasury spokesperson quoted by The Guardian, “As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy—which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn. We are committed to keeping taxes for working people as low as possible, which is why at last Autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of Income Tax, employee National Insurance, or VAT.”
Despite these reassurances, the proposed property tax reforms have stirred debate across the political spectrum. For many in the Conservative Party—especially those who remember the era of Margaret Thatcher’s “property-owning democracy”—the specter of higher annual property charges is deeply unsettling. As Collins observes, home ownership among under-40s has plummeted from 59 percent to 39 percent after 14 years of Tory government, with the average first-time buyer now aged 34—a decade older than during Thatcher’s tenure. The crisis is not just economic, but moral, he argues. The Conservatives once championed home ownership as a path to stability and pride, but today’s young people feel the social contract has been broken.
Collins writes, “If the Conservatives want to survive—they must once more become the party of home-ownership. The mood music must shift from Vera Lynn’s ‘We’ll Meet Again’ to Fleetwood Mac’s ‘Don’t Stop.’ The Tories must rediscover Disraeli’s one-nation roots and offer a vision which represents the whole country: the party of affordable housing for the young and a secure retirement for the old.”
With the government set to review property tax proposals before the Autumn Budget, and possible legislation within the current parliament, the coming months could reshape not only how Britons pay for their homes, but also the political fortunes of parties vying for the support of both young and old. For now, the only certainty is that the debate over who pays—and who benefits—in Britain’s housing market is far from over.
