"We could see a potential homeowner tax replace the current outdated council tax thresholds, and whilst details remain very thin on the ground, our analysis suggests many areas could see meaningful savings as a result"
- Verona Frankish - Yopa
The average household in England could save £1,000 a year if the government replaces stamp duty and council tax with a new annual homeowner tax, according to new analysis by Yopa.
The company examined the current average council tax bill across all local authorities in England and compared it with what homeowners might pay under a proportional property tax. This model, currently under discussion, involves a national levy set by the government to replace stamp duty and a local tax determined by councils to replace council tax.
For homes valued below £500,000, the local tax would be based on an average rate of 0.44% of property value, capped at £500,000, with a minimum payment of £800 per year. The final charge would depend on the rate set by local authorities.
For properties worth more than £500,000, Yopa modelled a national charge of 0.54% on the portion of value between £500,000 and £1 million, and 0.81% on any value above £1 million. These charges would be applied in addition to the local rate, providing a direct comparison with current council tax bills.
Yopa’s figures suggest that the average home in England currently pays £2,280 in council tax each year. With the proposed homeowner tax and based on the current average house price of £290,956, this annual charge would fall to £1,280, a reduction of £1,000.
The largest potential savings are concentrated in lower-value markets. In Nottingham, the typical household could save £1,816 annually. Similar gains were identified in Gateshead, where bills could fall by £1,778, in County Durham with a saving of £1,751, in Liverpool with £1,746, and in Pendle, where households could save £1,735.
However, the research highlights that not all households would benefit. Thirty-five local authorities, mostly in London and the South East with some in the East of England, would face higher annual charges.
The steepest rises would occur in prime London locations and parts of the commuter belt. In Kensington and Chelsea, the average household bill could climb by £7,057. Westminster would see an increase of £4,167, while the City of London would rise by £2,792. Other London boroughs facing large increases include Hammersmith and Fulham (£2,359), Wandsworth (£2,171), Camden (£2,124), Richmond upon Thames (£1,585), Islington (£1,274), and Southwark (£861). Outside the capital, Elmbridge in Surrey could see a £1,139 rise, while Windsor and Maidenhead would face an £861 increase.
“So far, the debate around replacing stamp duty with an annual homeowner levy has focused largely on the potential benefits to homebuyers, but it also has implications for existing homeowners who could see a change to the annual amount of tax they currently pay,” explained Verona Frankish, CEO of Yopa. “We could see a potential homeowner tax replace the current outdated council tax thresholds, and whilst details remain very thin on the ground, our analysis suggests many areas could see meaningful savings as a result.
“However, it’s important to consider that the proposed rates have yet to be confirmed and could vary depending on decisions taken by local councils. Given that the government stands to lose a considerable sum in stamp duty receipts, it may also look to claw some of this back by setting higher homeowner tax thresholds.
“Transparency on how the system is designed and implemented will be crucial so that homeowners can plan with confidence and so the market is currently waiting with bated breath for more details to emerge in the upcoming Autumn Budget.”
