The homeowners in the crosshairs of a Burnham property tax raid

Homeowners in the Chilterns could be forced to pay hundreds of millions of pounds more for living in their homes under Andy Burnham’s rumoured plans for a land value tax.

Property owners in the well-heeled hills to the north of London, with a house in council tax bands D-H, would have to cough up significantly more tax each year under plans believed to be under consideration by Mr Burnham.

Buckinghamshire would be forced to pay £986m under the proposed revenue raiser, £331m more than the £655m residents already collectively pay in council tax, according to analysis by Tax Policy Associates.

The think tank, led by Dan Neidle, a former senior tax lawyer and Labour Party member, said that under a flat land value tax of 1.29pc, residents in South Oxfordshire would experience a collective £90m tax rise, while St Albans and Dacorum would also face higher taxes of £191m and £107m, respectively.

Many property owners in London and across the Home Counties would have to foot a higher bill. Tax on Tunbridge Wells homes would rise from £134m in council tax to £210m under a land value tax.

East Hertfordshire homeowners would see their outlay rise by £84m from £177m in council tax to £261m in land value tax while North Hertfordshire would pay £61m more per annum, according to the think tank’s estimates.

Mr Burnham, who cemented himself as Labour’s next leader on Monday after he received the support of 349 MPs, has already voiced support for reforming property taxes.

During his Makerfield by-election campaign, Mr Burnham said he had “long been persuaded of the argument for a land value tax”, and had previously referred to it as “aspirational socialism”.

There are various models being proposed that could replace Britain’s myriad of property taxes, which currently include stamp duty on purchases as well as council tax, which is still based on valuations from 1991.

A land value tax could replace both taxes, reducing the cost of moving and shifting the tax burden from properties with lower price growth (largely in the North of England) towards those where prices have boomed: London and the South East.

In the report, Mr Neidle said the UK’s current property taxes were “broken, unfair and anti-growth” and claimed a land value tax could raise up to £56.7bn a year.

However, he also pointed to the difficulties with transitioning from the current form of taxation to Mr Burnham’s proposal. Anyone buying a house for £520,000 in Islington would no longer pay the £16,000 stamp duty but would see their £2,000 council tax rise to a £5,000 annual land value tax.

Mr Neidle suggested that people who purchased property recently would have their stamp duty outlay credited against land value tax. Without this kind of discount, he said: “People would be furious, and I think they would be right. It would be a desperately unfair result.”

Public sector middle earners such as teachers could also be forced to relocate from London and the South East as property becomes even less affordable, while asset-rich, cash-poor individuals who have lived in their home for decades “have no prospect of affording the land value tax”, Mr Neidle added.

Sir Mel Stride, the shadow chancellor, said the reform “risks being an unfair tax on aspiration”.

He said: “Nothing is safe under Labour – they have raised taxes on jobs, savings, pensions and now possibly the family home too.”

London and the South East of England would be the most heavily affected, with the capital estimated to pay an additional £8.5bn per annum and the South East £938m each year.

Homeowners in some London boroughs could be forced to swallow tax rises of more than £1bn. In Westminster, which has 132,270 homes, property owners would collectively face a £1.5bn land value tax, a significant rise from the £179m paid in council tax.

Camden, Wandsworth and Kensington and Chelsea would also demand tax bills of more than £1bn under a land value tax.

Meanwhile, the North West of England – home to Mr Burnham’s Makerfield constituency – is expected to pay £2.1bn less than under the current council tax system, while Yorkshire is expected to be £1.8bn better off.

Recent Telegraph analysis found that adopting a land value tax would lead Southerners to pay triple the bills of those in the North, at £1,650 compared with £600 on average.

Mr Burnham was contacted for comment.

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