Andrew Dixon, Founder and Chairman of Fairer Share
Sarah, a 28-year-old teacher in Manchester, earns £28,000 a year but still lives with her parents. Despite working full-time in a profession society values, she cannot afford even a studio flat in her hometown. Meanwhile, her elderly neighbour rattles around in a four-bedroom house she’d love to leave but can’t afford to sell due to stamp duty costs. This isn’t a housing shortage problem: it’s a tax system failure.
The Financial Times recently highlighted Britain’s growing generational fault line: adult children returning to family homes, squeezed by high rents and a dysfunctional housing market. But focusing solely on building more homes misses the deeper structural rot in our property tax system – a system that actively prevents the housing market from working for ordinary families.
The Hidden Tax Scandal
Britain’s property taxes are among the most unfair in the developed world, yet this scandal hides in plain sight. Council Tax, still based on 1991 property values, creates grotesque inequalities. A family in a modest Blackpool terrace can pay a higher effective rate than someone in a £5 million Westminster mansion. This isn’t just unfair; it’s economically destructive.
Stamp duty compounds the problem by creating what economists call “transaction friction.” It traps families in homes that no longer suit their needs, preventing the natural flow that would see older homeowners downsize and young families move up. The result? 1.4 million older homeowners tell surveys they want to downsize but feel financially penalized for doing so.
Beyond the Numbers: Human Cost
These aren’t just statistics – they represent broken dreams and constrained lives. Young couples delay starting families because they can’t afford family-sized homes. Essential workers like teachers, nurses, and police officers are priced out of the communities they serve. The generational contract that saw each cohort achieve homeownership earlier than their parents has shattered.
Renowned economics commentator Martin Wolf captured this perfectly when he wrote:
“Council tax and business rates make up the residue of an older and more rational system of property taxation. The Fairer Share manifesto provides a compelling attack on council tax. It should be reformed, together with business rates and stamp duty, and incorporated into a system of property taxation that is less unjust and encourages new development and more efficient use of developed urban land.”
A Practical Solution
At Fairer Share, we propose replacing Council Tax and Stamp Duty with a Proportional Property Tax – a single, fair rate applied to current property values. This isn’t radical redistribution; it’s basic fairness. Around 75% of households would pay less, while the system would finally ask those in the most valuable properties to contribute proportionately.
The benefits cascade through the system. Older homeowners could downsize without tax penalties, releasing family homes for younger buyers. Property transactions would flow more freely, making the market more responsive to changing needs. Local councils would gain stable, growing revenue streams tied to actual property values, not 30-year-old guesswork.
The Cost of Inaction
Every year we delay costs us dearly. Young people make life decisions based on a broken housing market – moving away from family support networks, postponing children, accepting long commutes that steal hours from their lives. Communities lose essential workers who can no longer afford to live where they work. The economic dynamism that comes from labour mobility withers.
We welcome Labour’s planning reforms and commitments to accelerate development decisions. But planning reform alone cannot fix a market distorted by perverse tax incentives. You cannot build your way out of a problem caused partly by a tax system that prevents optimal use of existing housing stock.
The Moment for Change
This government has the political capital to tackle long-overdue reforms. Property tax reform polls well because people understand fairness. Unlike many policy challenges, this one has a clear solution with broad benefits and identifiable winners: ordinary families currently locked out of homeownership or trapped in unsuitable homes.
The housing crisis has become a symbol of Britain’s broader dysfunction; a country where hard work no longer guarantees basic security, where each generation faces worse prospects than the last. Proportional Property Tax won’t solve every housing problem, but it addresses the systemic unfairness that makes our dysfunctional market even worse.
For too long, we’ve treated housing as a commodity to be hoarded rather than a foundation for family life and community building. The current system serves incumbents while punishing aspiration. It’s time for a tax system that works for the Britain we want to become, not the inequalities we’ve inherited.
Sarah the teacher deserves better than a childhood bedroom in her parents’ house. So does every young person whose life chances have been diminished by a property tax system designed in 1991. The question isn’t whether we can afford to reform; it’s whether we can afford not to.