Andy Burnham’s controversial land tax plans could knock 20 per cent off house prices in parts of the South

Andy Burnham’s new land tax plans could lead to a collapse in house prices in some parts of the south, according to a new analysis.

The incoming prime minister has repeatedly supported the idea of ​​introducing a new Land Value Tax, describing it as ‘aspirational socialism’.

The plan would replace council tax and stamp duty, which have long been criticized by economists.

A new analysis suggests the idea could reduce annual council tax bills in the north but lead to big increases in southern areas where average land values ​​are higher.

The scale of the increase in parts of London and the South East is potentially so large that it could lead to a 20 per cent fall in house prices in some areas.

The findings will raise fears that Mr Burnham, who plans to move part of his No 10 operation to Manchester, plans to launch a tax raid on middle-class southerners to fund lavish spending in the north.

The shadow chancellor, Sir Mel Stride, described the plan as ‘an unfair tax on wants’ and urged Mr Burnham to focus instead on reducing Britain’s bloated aid bill.

The new analysis, conducted by the Tax Policy Associates think tank, models the impact of imposing a 1.28 percent annual tax on land; This is the level needed to replace the £56.7bn of annual revenue generated by both council tax and stamp duty.

It found that overall, 69 percent of households would gain from the change, while 31 percent would lose.

But it also produced very different regional consequences.

In Blackpool, which has some of the cheapest house prices in the country, the average annual Band D council tax bill of £2,392 will be replaced by an annual Land Value Tax of just £662. Analysis suggests the scale of the change could trigger a housing boom in the town, with prices rising by 28 per cent.

In Wigan, where Mr Burnham’s family home is located, Band D council tax of £2,031 will drop to £1,355, with properties in the town potentially benefiting from a 9 per cent rise in house prices.

At the other end of the scale, Bristol’s Band D council tax of £2,584 will be replaced by a new annual tax of £4,808, almost double the amount. There may be a 12 percent decrease in house prices.

In Brighton, the £2,457 Band D note will jump to £4,284 and house prices will fall by 10 per cent.

The worst hit will be London. In Kensington and Chelsea, which has the highest house prices in the country, the Band D council tax bill will more than triple from £1,592 to £5,455 a year. Home prices in this range could drop by 21 percent.

The impact on more valuable properties will be even sharper.

The annual council tax bill for a band H property in the suburban belt city of St Albans will jump by a staggering £4,612 to £24,854, resulting in a 23 per cent drop in house prices.

Mr Burnham said he was planning new taxes on the better-off to fund giveaways such as energy bills. Asked this week about a possible wealth tax, he said people might be asked to pay ‘a little bit more’ to fund his plans. He said he would not hesitate to make difficult decisions to balance the books, but emphasized that it was too early to outline his plans in detail.

But the former Greater Manchester mayor, who will become Labor leader on Friday, has been campaigning for a Land Value Tax for years.

Speaking during last month’s Makerfield by-election, he said he had been ‘persuaded by the Land Value Tax debate for a long time’. Mr Burnham described council tax as ‘very regressive’ and said basing the bills on valuations dating back to 1991 was ‘not justified’.

Sir Mel warned against the move, saying: ‘If Andy Burnham is planning a new property tax it risks being an unfair tax.

‘Nothing is safe under Labour; They increased taxes on jobs, savings, pensions and possibly your home.

‘The best way to reform property taxes would be to abolish stamp duty, which can be funded if we get on top of the ballooning benefits bill. That’s what the Conservatives will do.’

Dan Neidle, founder of Tax Policy Associates, said the estimated impact on house prices was relatively ‘rough’.

But he said a blanket tax could lead to ‘very significant tax increases for some people’ and create a ‘sudden shock that massively reduces property prices in some parts of the country overnight’.

Mr Neidle suggested the impact could be reduced by implementing the policy on a regional basis, with each region collecting an amount equal to the amount collected locally in council tax and stamp duty.

He said changing stamp duty and council tax (two ‘horrible taxes’) could also boost economic growth.

But designing a new property tax could take years.

Danny Sriskandarajah, chief executive of the left-wing New Economics Foundation think tank, which has close ties to Mr Burnham’s team, said he was more likely to focus on short-term tax grabs such as increasing the capital gains tax rate.