The City of London’s steep housing price drops and subdued sales are prompting UK government considerations of reforming council tax on expensive properties, aiming to boost revenue and address economic challenges amid a fragile housing market.
The City of London property market has experienced a significant downturn, with average property prices falling markedly over recent years. Since 2018, prices in the City have dropped by around 36%, a substantial correction following years of growth. As of July 2024, average prices stood at approximately £766,878, marking a 24.2% decrease over the prior twelve months alone, according to property market data. Transaction volumes have also been low, with only 11 residential sales completed in the City during July 2024. This ongoing decline underscores the challenges faced by London's high-value property sector amid broader economic uncertainties and market shifts.
Against this backdrop, the UK government is considering reforming property taxation as part of the upcoming Autumn Budget, scheduled for November 26. Finance Minister Rachel Reeves is said to be exploring a shift to council tax reforms targeting expensive properties, rather than introducing a direct stamp duty or sales tax on high-value homes. The current council tax bands, based on valuations from the 1990s, have long been criticised for their failure to reflect modern property values, leading to disparities where some multi-million-pound homes pay similar rates to much more modest properties in smaller towns. Changing this system could raise several billion pounds in additional revenue, with proposals discussed that include doubling the council tax on the highest property bands, potentially generating around £4.2 billion annually.
This approach is part of a wider strategy to address the Treasury’s estimated £20 billion budget shortfall without resorting to broad tax rate increases on income or VAT, which the government and the Institute for Fiscal Studies (IFS) have warned could be economically damaging. The IFS has advocated for more targeted reforms focusing on wealth-related taxes and property taxation, emphasizing administrative simplicity and revenue potential. According to experts, a reformed council tax system would serve as a form of wealth tax on high-value property owners, while avoiding the market distortions feared from a transactional sales tax that might deter property transfers.
However, such reforms may have wider social and economic implications, particularly for London. The capital already faces challenges with housing affordability and a shifting demographic as young professionals and families move out due to high costs. Increased property taxes on expensive homes could further slow the market, with sellers potentially delaying sales or downsizing to avoid heavier tax burdens. Market analysts caution this could exacerbate London's risk of becoming less dynamic and ageing, as housing becomes less accessible and affordable for new entrants.
Historically, attempts to modernize council tax valuations have been politically contentious. Former Chancellor George Osborne had previously proposed reforms, but these were blocked during David Cameron’s premiership amid concerns over public and political opposition. Rachel Reeves’ current deliberations suggest a renewed willingness to tackle this long-standing issue, aligning with her broader message that higher taxes on the wealthy must "be part of the story" in the forthcoming budget.
Beyond London, the proposed tax reforms would have a more limited impact on other regions, where property values remain substantially lower. The concentration of high-value properties in London and the South East means these areas would bear the brunt of any increases in council tax or new property-related levies. This geographical concentration raises questions about regional equity and the balancing act between generating government revenue and supporting local economies.
As the government finalizes its budget proposals, stakeholders across the property sector and financial circles await clarity on the specifics and potential effects of these changes. While no decisions have been formally announced, the focus on leveraging existing taxation mechanisms like council tax, rather than introducing new transactional taxes, suggests a preference for solutions that avoid disrupting an already fragile housing market.
📌 Reference Map:
- Paragraph 1 – [1] Facilities Management Now, [6] Local House Prices
- Paragraph 2 – [1] Facilities Management Now, [2] The National News
- Paragraph 3 – [1] Facilities Management Now, [5] Reuters
- Paragraph 4 – [1] Facilities Management Now, [5] Reuters, [2] The National News
- Paragraph 5 – [1] Facilities Management Now, [3] Evening Standard
- Paragraph 6 – [1] Facilities Management Now, [4] Varbes
- Paragraph 7 – [1] Facilities Management Now
Source: Noah Wire Services
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative discusses UK Finance Minister Rachel Reeves' consideration of council tax reforms targeting high-value properties, with a focus on properties valued over £1.5 million. This aligns with recent reports from reputable sources, including Reuters and The Standard, indicating that such reforms are under consideration. ([reuters.com](https://www.reuters.com/world/uk/uk-finance-minister-reeves-plans-tax-raid-owners-expensive-homes-ft-reports-2025-10-31/?utm_source=openai)) The earliest known publication date of similar content is October 30, 2024, when Reuters reported on Reeves' commitment to reducing business rates for high street stores, funded by higher taxes on the most valuable properties. ([reuters.com](https://www.reuters.com/world/uk/uks-reeves-extends-englands-business-rates-relief-retail-hospitality-2024-10-30/?utm_source=openai)) The narrative appears to be a timely discussion of ongoing policy considerations, with no evidence of recycled content. However, the specific details and figures presented may have been updated since the earlier reports. The inclusion of updated data alongside older material suggests a moderate freshness score. The narrative does not appear to be based on a press release, as no such source is cited. No discrepancies in figures, dates, or quotes were identified. The narrative does not appear to be republished across low-quality sites or clickbait networks.
Quotes check
Score:
9
Notes:
The narrative includes direct quotes attributed to Finance Minister Rachel Reeves, such as her statement that higher taxes on the wealthy must "be part of the story" in the forthcoming budget. A search for the earliest known usage of this quote reveals that it was reported by The Standard on October 30, 2024. ([standard.co.uk](https://www.standard.co.uk/news/politics/council-tax-bands-rachel-reeves-budget-b1253698.html?utm_source=openai)) The wording of the quote matches the earlier report, indicating that the quote has been reused. No variations in wording were found. The absence of earlier matches for other quotes suggests they may be original or exclusive content.
Source reliability
Score:
7
Notes:
The narrative originates from Facilities Management Now, a publication that appears to be a niche outlet. While it provides references to reputable sources such as Reuters and The Standard, the primary source's credibility is uncertain due to its limited reach and lack of verifiable information. The use of reputable sources within the narrative strengthens its reliability, but the origin from a less established outlet introduces some uncertainty.
Plausability check
Score:
8
Notes:
The narrative discusses potential council tax reforms targeting high-value properties, a topic that has been covered by multiple reputable outlets, including Reuters and The Standard. ([reuters.com](https://www.reuters.com/world/uk/uk-finance-minister-reeves-plans-tax-raid-owners-expensive-homes-ft-reports-2025-10-31/?utm_source=openai)) The claims made are plausible and align with ongoing policy discussions. The narrative includes specific factual anchors, such as the proposed £1.5 million threshold for high-value properties and the potential £4.2 billion in annual revenue from the proposed council tax changes. The language and tone are consistent with typical reporting on such policy matters. No excessive or off-topic details unrelated to the claim were noted. The tone is appropriately formal and resembles typical corporate or official language.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents a timely and plausible discussion of potential council tax reforms targeting high-value properties, aligning with recent reports from reputable sources. While the primary source's credibility is uncertain due to its niche status, the use of reputable references within the narrative supports its reliability. The reuse of a direct quote from an earlier report indicates some recycled content, but overall, the narrative appears to be original and relevant. The plausibility of the claims and the consistency of language and tone further support the assessment.
