The politics of property taxation

And a sneak preview of our report by Will Hutton coming out later this week

Across think tanks, policy circles and much of the economics profession, there is a settled view that Britain’s current property tax system is a mess. It is widely seen as unfair, outdated and distortionary. And yet despite the obvious case for change, reform has proven remarkably difficult. For the most part, this isn’t because we don’t know what we’d replace it with. That’s to say, it’s not a technocratic problem. Like so much else at the moment, it is a political problem, downstream from housing and home ownership’s powerful place in the British social imaginary.

Any proposed tax reform, but especially property tax reform, is not therefore received as a neutral attempt to fix a broken system. For the public, it is a threat to something that they have spent decades working towards, the result of thrift and effort. Whereas reformers see abstract capital, voters (at least the ones lucky enough to own property) see security and independence.

In terms of polling, there is broad recognition that the current system is unfair. People know that it is wrong that modest homes in one part of the country are taxed disproportionately more than vastly more expensive properties elsewhere. They can see that stamp duty makes moving harder and that property prices need reevaluating. But recognising unfairness in principle is not the same as backing reform in practice. The moment that any proposal becomes concrete, people want to know what it means for them, not for the system.

Naturally, history matters too. Since the poll tax catastrophe, governments have repeatedly avoided big changes to local taxation. But the situation has got much worse since then. The deeper problem now is that Britain’s economic model has become more structurally dependent on property. As Lisa Adkins (with Melinda Cooper and Martijn Konings) argues in The Asset Economy, housing is no longer just one tenure among others or simply a site of consumption. It has become one of the main mechanisms through which class position and life chances are organised. In an asset economy, inequality is shaped less by income alone than by access to appreciating assets, above all housing. Any reform that would increase taxes on this scarce asset class therefore risks unsettling one of the central ways in which households have come to understand success in a low-growth economy.

This helps to explain why the difficulty of property tax reform is less a failure of political communications and more a feature of the wider settlement, shaped by policy choices that have elevated housing as the central mechanism through which British society now allocates security and reward. For decades, governments have allowed property wealth to substitute for decent public services, stronger wage growth and a more dynamic and innovative economy. Unless and until that changes, any serious attempt to tax property more rationally is therefore likely to meet stiff resistance.

None of this is to suggest that more modest reforms, such as revaluing property or adding new council tax bands, depend on a wholesale transformation of Britain’s economic model. But for those who want something more substantial, the central question may be less how to win the case for reform on its own terms than how to situate it within a broader shift in our political economy, one that gives people more durable sources of security.

This short note is written by our senior researcher, Jack Jeffrey. Jack is planning to do some work on the politics of property taxation over the next few months, and is interested on hearing from readers by email with views on the topic or interest in collaboration.

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REPORT PREVIEW: ESCAPING THE STATE WE’RE IN

On a related topic, this Thursday (19 March) we’re publishing an essay by Will Hutton, chair of our advisory board, about how to fix Britain’s political economy. We’ll provide a fuller write-up in next Monday’s Fair Comment, but if you can’t wait until then you can read a preview that was published in yesterday’s Observer (snippets below), or check the Fairness Foundation website from Thursday onwards for the full report.

Thirty years ago, The State We’re In was published… I argued that [Thatcher] had bequeathed a divided and weakened society that actually undermined the economy, and that the better route was a stakeholder, high-investment capitalism that put fairness at its heart… Yet in 2026 we are where I feared in 1996 that we would be. Continued inattention to fixing the financial architecture in which our companies can grow and flourish has meant that many of our great businesses have been dismembered while others decay and stagnate. Too many young companies that might replace them are acquired or sold abroad. Societally, living standards are barely increasing while a century of improving public health and lengthened life expectancy is being reversed, especially in our former industrial heartlands. A great economy cannot be built upon a weak society… So colleagues at the Fairness Foundation and elsewhere, dismayed at the plummeting standing of what on current trends could be Britain’s last Labour government, urged me to remake the arguments today.

Will Hutton, The Observer, 15 March 2026