Landlord Knowledge - Home of the Savvy Buy to Let Property Investor

Proposed seller property tax could hit London homeowners hardest


Landlords and property investors have been warned that the government’s proposed replacement of Stamp Duty with a seller-paid property tax would unfairly target London. Analysis by Benham and Reeves shows that 60% of homes for sale in the capital are above the £500,000 threshold under consideration, compared with just 30% nationally.

Stamp duty shift raises regional fairness questions
Reports suggest Chancellor Rachel Reeves is considering scrapping Stamp Duty Land Tax (SDLT) and introducing a proportional property tax on sellers of homes valued above £500,000. The measure, designed to help buyers, could instead push the burden onto sellers in high-value regions.

Marc von Grundherr, director at Benham and Reeves, said: “The proposal to shift Stamp Duty onto sellers via a property tax on homes above £500,000 may sound like a progressive move at a national level, but in reality it’s a tax on London, designed to win favour with the nation’s homebuyers at the expense of the capital’s home sellers.”

In areas like Kensington and Chelsea, where 93% of properties are listed above the proposed threshold, the majority of transactions would face the tax. The same is true in Westminster (91%), the City of London (89%), and Camden (83%). Even in outer boroughs such as Richmond upon Thames (69%) and Lambeth (62%), most sales would be caught.

Landlords fear ripple effects on buy-to-let
For landlords, the concern is not just the direct cost of selling but the wider impact on liquidity in the London housing market. With many already facing higher mortgage costs and new regulation under the Renters Rights Bill, an additional tax barrier could deter sales and complicate portfolio restructuring.

The National Residential Landlords Association (NRLA) has repeatedly urged policymakers to consider regional variations. Chief executive Ben Beadle has warned: “Policies that ignore the realities of local housing markets risk driving landlords out and reducing supply further. London and the South East cannot be lumped in with the rest of the country when property values are on a completely different scale.”

If sales activity slows, experts caution that upward pressure on rents could follow, as fewer homes change hands and more tenants compete for a shrinking pool of available stock.

Investors call for balanced reform
Von Grundherr argues that £500,000 does not buy a luxury home in London, but often represents an ordinary flat or family property. “By targeting this price bracket, the Treasury risks penalising ordinary London homeowners, while leaving much of the rest of the country largely untouched,” he said.

Landlords in central boroughs also question whether the proposals could depress values by discouraging transactions. One Camden-based landlord told us: “If I know I’ll be hit with a seller tax on top of capital gains, I’ll think twice before selling. That creates more stagnation in a market already struggling with affordability.”

Editor’s view
This latest proposal reflects a worrying trend: policy designed with electoral optics in mind, rather than market reality. A £500,000 threshold may sound like a levy on the wealthy, but in London it catches the average. For landlords, this is not just about fairness—it’s about liquidity, confidence and long-term investment.

 

RSS
Follow by Email
X (Twitter)