Home Economics: Reforming England's Housing Taxes (Resolution Foundation, 2026)

Summary

Home economics: How to put England's broken housing taxes on firmer foundations, by Hannah Aldridge, Mike Brewer and Matthew Cavanagh of the Resolution Foundation, is a 43-page briefing note published on 24 September 2026.[1] The Resolution Foundation describes itself as an independent think-tank focused on living standards for low- and middle-income households (p.43). The note argues that England's two main housing taxes, council tax and the main rate of stamp duty land tax, are "a complete mess, both economically and from the point of view of fairness" (p.3), and recommends replacing both with a single proportional tax on property value: 0.7% a year, paid by the occupier, revenue-neutral against about £74 billion in 2030-31, with a means-tested rebate and a deferral scheme (pp.4, 16).[1]

Two features matter for the Georgist debate. First, the report is among the most authoritative current UK reform proposals to come from an established research institute rather than a campaign. Second, it addresses land value taxation directly in a boxed passage (Box 1, p.14): it describes the theoretical case as "very strong", and then declines a land-only base on transition grounds, following the Mirrlees Review in preferring one rate on land and buildings together.[1] The report does not model a land value tax; every figure in it is for a tax on total property value.

The Proposal

Base and rate. A flat, proportional tax on the "capital value of the property", chosen over the theoretically purer rental value "for the purposes of valuation, as well as public understanding and legitimacy" (p.14). The legal liability stays with the occupier, as with council tax, to limit the difficulty of shifting formal incidence from tenants to landlords and the risk of non-compliance (p.15, fn15). The authors say the aim is to set taxes "proportional to the housing services that families 'consume'", "akin to the approach proposed by the Mirrlees Review" (p.4).[1]

Rate and revenue neutrality. The authors estimate that a rate of 0.66% would be approximately revenue-neutral, with a slightly higher rate needed to cover lost revenue from rebates; alongside separate surcharges on second homes and empty properties raising at least £3 billion, a rate of 0.7% would be revenue-neutral in 2030-31 after rebates, ignoring deferrals because that revenue is delayed rather than forgone (pp.16–17). The target is the 2030-31 total of £59 billion from council tax (net of discounts and rebates, including the High Value Council Tax Surcharge) plus £15 billion from main-rate stamp duty, £74 billion in all (p.16). These rates are set against an estimated housing stock of £10.9 trillion in 2030-31, after an adjustment for the capitalisation effects of the reform (p.16, fn19). The authors flag "inherent uncertainty" in the figure and note that commentators' cost-neutral rates fall between 0.6% and 0.7% of value; a separate proposal from the UCL Prosperity 2030 programme uses 1.0%, partly to raise extra revenue (p.17, fn21).[1]

Rebate and deferral. The support scheme is modelled on the former Council Tax Benefit, with one change: it tests home equity as well as income. Owner-occupiers with less than 35% equity receive a rebate; those with more are offered deferral, paying in a lump sum at sale. The 35% threshold is chosen so that bills could be deferred for 50 years without negative equity (pp.15–16). The authors acknowledge that the threshold creates a cliff edge for lower-income mortgagors and judge the incentive seldom to bite (p.16, fn17), and that similar deferral schemes abroad have seen low take-up (p.36).[1]

Stamp duty. Main-rate stamp duty is abolished as part of the package. The authors caution that abolition "in isolation" would give a windfall to existing owners and worsen the regressivity of the system, so the two reforms should come together (pp.5, 29, 31).[1]

Transition. Five elements (pp.5–6, 33–37):[1]

1. A valuation database first. A new, up-to-date list of property values, which the authors call the precondition for almost any sensible reform, launched at the next Budget and taking at least two years.
2. A stamp-duty freeze, then credits. A commitment to hold current rates, "for, say, the rest of this Parliament", and to treat stamp duty paid during the transition as a credit against future property tax bills. The credits would be usable for a time-limited period (two to five years) and only where a homeowner's annual charges rise (p.34).
3. A four-year phase-in for owner-occupiers. In the first year, three-quarters of the old bill plus one-quarter of the new, moving by a quarter each year to the full new bill in year four (p.34).
4. A different path for private renters. The new bill would apply when a tenant moves or five years after introduction, whichever is sooner, so that rents can adjust; the authors also propose unfreezing Local Housing Allowance and a targeted equity-loan scheme for first-time buyers (pp.35–36).
5. A commission on residential property taxes, with a commitment to make no stamp-duty rate cuts until it reports (p.37). The note leaves the re-basing of local-government grants, and how far councils could vary a national rate, as questions for that process (pp.30–31).

Distribution and Revenue

All distributional figures compare the current system (council tax, the surcharge and stamp duty) with a uniform proportional tax, for England in 2030-31 unless stated.[1]

• Regional imbalance in 2024-25. Relative to the value of housing, residential property taxes were equivalent to 0.8% of housing value in the North East and 0.4% in London. Compared with a system in which revenue tracked housing value equally everywhere, London paid £3.1 billion too little in 2024-25; if the rest of England had been taxed at London's rate, regions outside London would have paid £12.3 billion less (pp.3, 12).
• More losers than winners. 61% of households overpay relative to a uniform proportional tax, by an average of £430 a year, and 36% underpay, by an average of £680; only 3% pay the same (pp.3, 19). Some 68% would see a change of at least £250 a year in either direction (p.23).
• Region. In the North East 85% of households overpay, by £710 on average; in London 80% underpay, by £950 on average; outside London just over two-thirds (68%) overpay (pp.3, 20).
• Income. 63% of households below the 80th income percentile overpay; 56% of the top 5% underpay (pp.3–4, 20–21). The authors stress that winners and losers are spread across the income distribution because the driver is regional divergence in house prices since 1991, and that the reformed system would be less regressive with respect to income than council tax (pp.21, 32). Prices have risen 7.3-fold in Inner London and 4.2-fold in the North East since 1995 (pp.3, 11).
• Low-income losers remain. Even with the rebate, around a quarter (25%) of households at the very bottom of the income distribution would pay at least £250 a year more (p.4).
• Private renters. The modelling assumes 90% of any change in a recurrent property tax falls on landlords in the long run and 10% on tenants, a pass-through the authors place at the top end of the empirical range (p.18, Box 3, fn24).
• Transaction effects. Abolishing the main rate is estimated to add about 92,000 house moves in 2030-31, an 11% rise on roughly 800,000 liable transactions, using the Office for Budget Responsibility's 2017 elasticities, which the authors describe as highly uncertain (p.24, fn25). The central estimate of the gain from extra labour mobility is a 0.04% higher level of GDP after ten years of additional moves (p.25), and the authors put the deadweight loss of the tax at anywhere from 12% (a simple Harberger triangle) to about 60% or 120% of revenue, based on the wider literature (pp.28, 42).
• Prices. With both reforms, the authors' capitalisation modelling implies median property values rise where the tax burden falls, mainly the North and Midlands, and fall in London, so that a revenue-neutral reform narrows regional price gaps (pp.29–30, Fig. 12). Magnitudes are shown only in the chart and are approximate: roughly a 12–14% rise in the North East against a fall of several per cent in London.

Relation to the Georgist Case

What the report proposes is a property-value tax, justified as a consumption tax. Box 1 (p.14) starts from the neutral taxation of housing consumption: renters and owner-occupiers alike consume housing services, and a proportional tax on the value of those services is the analogue of VAT. That rationale differs from a rent-capture rationale, though the base it selects (the capital value of land and buildings together) is the same as that of other UK proposals, including the proportional property tax promoted by the campaign group Fairer Share (see Andy Burnham).

Box 1 on land value tax. The box acknowledges the efficiency argument for a land-only base:

"There is a very strong theoretical case for such a tax: land is in fixed supply and its value is not changed by human effort, so taxing it would not disincentivise any activity that we would value." (p.14)

It then gives two reasons for not adopting it. The first is the report's reading of the Mirrlees Review: taxing land and taxing land-plus-buildings are both desirable, and "applying one rate is preferable for practical reasons" (p.14). The second concerns transition:

"The tax base for an LVT would be even more geographically concentrated than for a proportional property tax: land makes up a larger share of a property's value where property values are higher, so the changes would be even more extreme and the transition harder." (p.14)

The box also notes what a whole-property base costs: "bringing the building into the tax base can disincentivise things we would like to see, such as construction or improvements" (p.14). The report's chosen base, land and buildings together, carries that cost.[1]

Set against the capitalization and transition material. Three points connect this argument to existing discussion.

1. The concern is the size and concentration of the shock, not the principle. Box 1 makes an empirical claim, that the land share of value rises with value, so a land-only base concentrates the gains and losses more than a property-value base. It gives no land-share figures, and the report contains no land-only simulation. Whether the concentration would be sharper than under the report's own design is therefore an assertion in the report rather than a modelled result. A separate 2026 UK model of a land-only replacement, that of the tax-policy non-profit Tax Policy Associates (a practitioner source, cited here for comparison only), calibrates a land share and reports its sharpest losses in prime London property; see Tax Policy Associates: What Would a Land Value Tax Actually Do?.
2. The instruments the report uses are the ones the transition literature proposes. Phase-in, deferral for the asset-rich and income-poor, and credits for recent buyers appear in the report's roadmap, as they do in the responses collected on the transition wealth shock and asset-rich, cash-poor objection pages. The report's phase-in and credit design was worked out for a property-value base, and its authors do not claim it would be sufficient for a land-only base.
3. The report assumes full capitalisation. Its price modelling assumes "full pass-through of the change in the tax into the prices of properties", capitalised at a 3% discount rate (p.40, Annex 2). That is the mechanism behind the objection's premise, and the size of the one-time shock rests on it. Empirical studies of how far land and property taxes capitalise are not unanimous: see the tax capitalization concept page and the two Danish quasi-experiments, the Danish Economic Councils study (full capitalisation) and Nielsson, Wroblewski & Yding (no measurable effect on home prices).

Same regional pattern as other 2026 UK models. The report's finding that the North overpays and London underpays under the current system, relative to a value-proportional tax, is a finding about the stale 1991 council tax base. The same direction appears in the Tax Policy Associates model linked above, which reports gains concentrated in lower-value regions of the North and Midlands and losses in prime London. The Ahmadi & Ghenis PolicyEngine microsimulation reports a similar aggregate outcome for a land-based replacement, with about two-thirds of households gaining and losses concentrated among the wealthiest, but, as summarised on that page, reports its results by wealth and income decile rather than by region. The three studies use different bases, rates and data, and the figures are not comparable.

Relation to the other 2026 UK proposals. Muellbauer's September 2026 paper proposes a proportional surcharge on the top slice of property value; this report proposes a whole-stock replacement of council tax and stamp duty on a property-value base; the campaign group Fairer Share promotes a proportional property tax on the same base as this report; the Tax Policy Associates and PolicyEngine studies model land-only bases. The report thanks John Muellbauer for conversations (p.2), cites his earlier papers for proposals and for deferral design (pp.33, 36, fns 35 and 42), and cites the Tax Policy Associates article as a precedent for a stamp-duty credit scheme (p.33, fn37). It does not list Muellbauer's September 2026 paper among its references.[1]

Nuances and Limits

• A think-tank briefing note, not a peer-reviewed study. It is published under the Resolution Foundation's own name, and the modelling uses the IPPR Tax-Benefit model on Family Resources Survey data, projected to 2030-31, with property values imputed from Land Registry and Ministry of Housing, Communities and Local Government data (Annex 2, pp.39–41).[1]
• Modelling simplifications the authors state. Property values are assigned within region and dwelling type, so local variation in council tax rates is not captured and the number of large winners and losers may be understated (p.40); stamp duty is annualised over 20 years on owner-occupied homes only (p.17); rebate entitlement for partial-rebate households is slightly understated (p.41).
• Revenue neutrality depends on the year and the stock estimate. The 0.7% rate sits at the top of the range because the authors target 2030-31 receipts and use a lower estimate of the housing stock (p.17, fn21); it also relies on at least £3 billion from second-home and empty-property surcharges, which the note does not itself model, citing campaign estimates in a footnote (p.16, fn20).
• The transaction and GDP effects are described as highly sensitive. The report cites other research finding larger behavioural responses (pp.24, 26, 42).
• Political economy is acknowledged as the obstacle. The authors say politicians fear that the losers' resentment will outweigh the winners' gratitude, and cite the Poll Tax (p.4). They note that the prospective losers include Londoners in expensive homes and some poor households, and that reform must accompany changes to local-government funding (pp.4, 30).
• Box 1 is a short passage in a long report. The authors do not claim to have assessed valuation feasibility, land-share estimation or the size of any land-based transition loss.
• Press-release rounding. The release accompanying the report says stamp duty prevents "around 100,000" purchases a year; the report's own estimate is about 92,000 additional moves in 2030-31, and the report figure is the one used above.[2]

Bears On

• Objection: LVT inflicts a one-time wealth shock — a mainstream UK reform proposal that treats transition size as the deciding reason for a broader base, while itself relying on phase-in and credits.
• Objection: LVT hurts the asset-rich, cash-poor — an equity-tested deferral design (35% equity threshold, payable at sale) for a value-based tax.
• Concept: Land Value Tax · Tax Capitalization
• Place: United Kingdom
• Person: Andy Burnham — the report does not name him.

See Also

• The Mirrlees Review: Tax by Design — the source of the single-rate approach this report adopts
• Muellbauer: Property Tax Reform in England (2026)
• Ahmadi & Ghenis: UK Council Tax to LVT Microsimulation
• Tax Policy Associates: What Would a Land Value Tax Actually Do?
• Andy Burnham · United Kingdom
• Mass Appraisal Methods — the valuation capacity the report treats as the first step
• Institute for Fiscal Studies

Sources

1. Hannah Aldridge, Mike Brewer & Matthew Cavanagh (2026), Home economics: How to put England's broken housing taxes on firmer foundations, Resolution Foundation briefing note, 24 September 2026, doi:10.63492/kpyf844. resolutionfoundation.org — full 43-page PDF read at last review (2026-09-30); page locators are PDF pages, which match the printed page numbers; the Box 1 quotations were checked against the text. Used for the proposal (0.7% proportional tax on property value, occupier pays, rebate under 35% equity with deferral to sale, transition roadmap, commission) and the report's stated positions and Box 1 reasoning on land value tax (A-claim), and for the modelled revenue, distribution, transaction and price figures, including £74 billion, £10.9 trillion, 61%/£430, 36%/£680, 85%/£710, 80%/£950, £3.1 billion, 92,000 moves and the 0.04% GDP estimate (B-claim; the authors' own modelling, not independently replicated). The regional price changes in Figure 12 are given in the report only graphically, so the magnitudes above are approximate.
2. Resolution Foundation (2026), "Broken housing taxes mean Londoners are under-paying by £3.1 billion – with the rest of England over-paying in return," press release, 24 September 2026. resolutionfoundation.org — used for the release's "around 100,000" stamp-duty figure, which is the release's own rounding of the report's estimate of about 92,000 additional moves, and for the release date (A-claim; the release is a summary of the report and defers to it on figures).