Property Tax Reform

The Problem: A Tax Frozen in 1991

Council tax in England is calculated on property valuations from 1991, over three decades ago. House prices have tripled since then in much of the country and risen eightfold in parts of London. The tax has not been recalculated. The result is deeply regressive: a flat in central London worth two million pounds pays similar council tax to a three-bedroom house in Manchester worth a quarter of that.

The banded structure makes it worse. Band H properties pay only three times what Band A properties pay, despite being worth eight or more times as much. In Band A areas (concentrated in the North and Midlands), the effective council tax rate runs to 2.3% of property value. In Band H (concentrated in London and the South East), it runs to 0.3%. The people with the least pay the highest proportion. This is indefensible.

A. Abolish Council Tax. Introduce a Progressive Property Tax

Council tax and its eight arbitrary bands are abolished. Every residential property pays a progressive property tax on its current market value, structured in bands like income tax. Lower-value homes pay a lower rate, higher-value homes pay a higher rate on the portion above each threshold. No 1991 valuations. The tax is calculated on what your home is actually worth today, and it is genuinely progressive: the more valuable the property, the higher the effective rate.

Because the rates are keyed to value rather than location, the reform addresses the London problem without a separate regional rate. A £2.5m house in Surrey and a £2.5m house in Kensington pay exactly the same. The structure means the genuinely expensive properties, which are concentrated in London and the South East, contribute more, while the majority of homes across the country pay less than they do under council tax.

Lower-value homes, concentrated in the North, Midlands, and coastal towns, see bills fall. Higher-value homes, concentrated in London and the South East, pay their fair share for the first time. The core principle: if you own more, you contribute more. If your home is modest, your tax is modest.

The bill also stops rising automatically. Council tax has increased by roughly 5% every year because councils have no other way to fund growing costs. Under the property tax, the band rates are fixed. Your bill only changes when your property value is reassessed every three years. If values are stable, your bill is stable.

B. Revenue Redistributed by Need, Not Wealth

Revenue from the progressive property tax is collected nationally and redistributed to local authorities according to need, not according to local property wealth. Currently, a council in Surrey raises ten times more per resident than a council in Stoke-on-Trent, despite Stoke having far greater demand for social care, mental health services, and housing support. This structural injustice ends.

The redistribution formula is based on:

• Population size and demographics, with additional weighting for areas with older populations and more children in care
• Deprivation indices using the Index of Multiple Deprivation, ensuring Stoke, Middlesbrough, and Blackpool receive funding commensurate with their service demands
• Infrastructure deficit, with capital allocation for areas with documented backlogs in roads, housing, and public facilities
• A floor guarantee: no local authority receives less than 90% of its current funding in the first three years, providing a transition buffer for areas that currently benefit from high local property values

C. Phased Over 5 Years, No Shock Bills

The property tax does not hit anyone with a sudden increase on day one. It is phased in over the full parliament:

• Year 1: pay current council tax plus 20% of the difference between that and the new property tax
• Year 2: 40% of the difference
• Year 3: 60%. Year 4: 80%. Year 5: full rate
• Properties below the regional median see bills fall immediately in Year 1. The phase-in only applies where the new tax is higher than the old council tax
• Annual statements show the current bill, the full property tax amount, and the phase-in percentage for that year. No surprises

D. Pensioner and Low-Income Protection

Pensioners over 67 with property worth more than they can comfortably tax against income can defer their property tax increase, with the deferred amount accruing interest at the Bank of England base rate and recovered from the estate or on sale of the property. Nobody is forced to sell their home because of property tax.

For working-age low-income households, an income-tested partial deferral is available on the same terms. The principle: nobody loses their home, but everyone pays their share eventually.

Additional Protections: Making the Transition Fair for High-Value Areas

The property tax is distributionally correct by design — the progressive bands mean lower-value homes pay less than under council tax, while higher-value homes pay a genuinely higher effective rate for the first time since 1991. But we are honest about the impact on households in London and the South East who bought modestly and have seen values move around them. Three additional protections apply on top of the five-year phase-in and pensioner deferral:

• Income cap at 3% of gross household income. If the property tax at full rate would exceed 3% of your gross household income, the excess is automatically deferred on the same terms as the pensioner deferral — base rate interest, recovered on sale or from estate. A household earning £50,000 per year pays a maximum of £1,500 property tax annually regardless of property value, with anything above deferred. This is not a London subsidy. It is a basic fairness principle: tax should not exceed a reasonable proportion of income. It applies nationwide. It is most relevant in London and the South East where the income-to-value ratio is most compressed.
• Long-term resident discount of 25%. Any owner-occupier who has lived in the same property as their primary residence for 15 or more continuous years receives a 25% reduction in their property tax rate. This protects the person who bought a modest home in 1985 in what is now an expensive area and has watched values rise around them through no action of their own. It rewards stability and roots. It does not apply to investment properties or second homes.
• Gradual revaluation — not a cliff edge. The three-yearly revaluation cycle means property tax changes are gradual and predictable. A sharp local market movement does not translate into a sharp bill increase the following year. The phase-in applies to the initial transition. The three-year revaluation applies to ongoing change.

E. Abolish Stamp Duty on Your Home

Stamp Duty Land Tax is a tax on moving. It punishes families who need a bigger home, penalises pensioners who want to downsize, and locks the housing market by making every transaction cost thousands before you have unpacked. On a 350,000 pound home, stamp duty is 6,250 pounds. On a 500,000 pound home, 15,000 pounds. This is money that could go toward the deposit, the mortgage, or the move itself.

• Stamp duty abolished on all primary residence purchases. Buy your home, move to a bigger one, downsize in retirement, all without a transaction tax punishing the decision to move
• Stamp duty retained and increased on buy-to-let and second homes. Investment properties are assets. The tax stays and the existing surcharge remains
• Removing stamp duty on primary residences unlocks mobility. Pensioners in oversized family homes who would downsize but cannot afford stamp duty will move, freeing up family homes for the next generation. First-time buyers keep thousands more toward their deposit

F. Renters' Rights: Going Beyond the 2026 Act

The Renters' Rights Act 2025 came into force on 1 May 2026. It ended Section 21 no-fault evictions, banned bidding wars, capped advance rent at one month, capped deposits at four weeks, abolished blanket pet bans, and made all assured tenancies periodic. These are real wins. But the Act regulates how landlords can evict. It does little about how much they charge, how fast rents rise, or the state of properties when tenants move in. Forge builds on what the Act delivered and closes the gaps that 11 million renters still live with.

• Cap rent rises during a tenancy at CPI + 1%. The 2026 Act allows rent rises once a year with a First-Tier Tribunal challenge, but tribunals assess market rent, and in expensive markets any rise is allowed. We replace the market-rent test with a hard CPI + 1% cap during any tenancy. Landlords charge what the market bears for a new tenant; they cannot ratchet up rents on existing tenants to force them out
• One national deposit protection scheme run by HMRC. The Act leaves three competing private schemes (DPS, MyDeposits, TDS) with different dispute processes. Forge replaces all three with a single scheme. One dispute process. Disputes resolved by an independent adjudicator within 14 days
• 28-day fix-or-no-rent for serious hazards. Landlords must remediate any Category 1 hazard (severe damp, mould, broken heating, electrical danger) within 28 days. Failure suspends the rent obligation and triggers an automatic rent repayment claim
• Public quality scores for every rental property. The Act creates a council-only landlord database. Forge makes it public: every rental property carries a digital quality score covering EPC rating, hazards reported and resolved, repair response times, and tenant reviews. Tenants check the score before signing, like checking a hotel
• Criminal liability for persistent illegal evictions. Landlords with three or more substantiated illegal-eviction findings face criminal prosecution and a banning order from letting any property

Why This Works

Revenue Integrity and the Growth Infrastructure Fund

The progressive bands raise more than the flat rate would, and more than current council tax, while still cutting bills for the majority of homes. The additional protections (income cap, long-term resident discount, pensioner deferral) are fully costed within the totals below.

• The income cap and pensioner deferral are not revenue losses. They are timing differences. The deferred amounts accrue at Bank of England base rate and are recovered on sale or from the estate. The Treasury holds a growing stock of claims it collects over time. Estimated annual deferral: £2.4 billion, all recoverable.
• The long-term resident discount is a genuine cost of approximately £2.6 billion per year — roughly 4% of total property tax revenue. This is the price of protecting stability and fairness.
• Net position under the progressive bands: gross property tax revenue is approximately £104.3 billion, minus the long-term resident discount of approximately £2.6 billion, giving roughly £101.7 billion annually. Against current council tax of £40.5 billion, that is over £60 billion more flowing to local services and redistribution. Critically, the progressive structure raises approximately £10 billion more than a flat-rate property tax would have raised.
• The £10 billion Growth Infrastructure Fund. That additional £10 billion generated by the progressive top bands, the portion paid by the most valuable properties above what a flat rate would have collected, is ring-fenced entirely for a national Growth Infrastructure Fund: transport, energy grid, digital connectivity, and the physical investment that raises long-term productivity. The wealthiest properties, concentrated in London and the South East, directly fund the infrastructure that rebalances growth across the whole country. This is redistribution that builds rather than redistribution that only transfers.
• The bands are set deliberately, not arbitrarily. The lower bands are calibrated so the majority of homes (under £300,000) pay slightly less than current council tax. The upper bands generate the Growth Infrastructure Fund. The structure is progressive, fully costed, and the protections are paid for within it.

Australia, the United States, France, Germany, and the Netherlands all tax property at percentages of current market value. The UK is an outlier in using 35-year-old valuations with arbitrary bands. Every independent analysis from the Institute for Fiscal Studies to the Resolution Foundation to the Mirrlees Review has recommended moving to a market-value-based property tax. The political difficulty has always been the transition. The 5-year phase-in and pensioner deferral directly solve the transition problem. The economics have always been sound. Now the politics can be too.