Burnham's bid for the top job has sparked hope among those seeking an overhaul of property taxes. The Labour leader has long championed the abolition of stamp duty, a move he believes will boost the housing market and free young people from the "tax on their aspirations". With his party's manifesto commitment to no tax rises in key areas, Mr Burnham now sees room for manoeuvre – and some movement is expected.
A land value tax (LVT) is one proposal reportedly backed by Mr Burnham. This would be an annual charge based solely on the inherent value of the land itself, separate from any buildings or improvements upon it. An LVT could replace stamp duty altogether, with those who own valuable plots benefiting from the revenue generated.
Economists argue that a land value tax is more efficient than stamp duty, which they describe as "one of the most economically damaging taxes". The Institute for Fiscal Studies (IFS) agrees, saying it discourages property transactions and hinders the use of existing housing stock. A move to LVT could lead to better utilisation of properties, reducing pressure on the market.
However, the practicalities of implementing such a change are significant. Savills' Lucian Cook warns that any new tax system would create "clear winners and losers", while also posing bureaucratic challenges in determining land values separate from buildings. Stamp duty's simplicity and upfront receipts for the Treasury may be hard to match.
Economists like Stuart Adam argue that an LVT is more effective, as it targets a finite resource and cannot be moved offshore. By not affecting transactional behaviour, an LVT could reduce market pressure – potentially lessening demand for new construction. But would Mr Burnham's government have the electoral mandate to bring about such a fundamental shift?
Whatever the outcome, the debate highlights the need for a more efficient property tax system that works in favour of both homeowners and businesses.