“Every time Labour talks about growth, they reach for another tax on property. Investors are being punished, landlords are being squeezed out and developers are facing rising costs from every direction.”
Britain now has the highest property tax burden of any major developed economy, according to new analysis that is likely to intensify criticism of Labour’s handling of the economy and housing market.
Research by advisory firm Ryan Tax Services found that property taxes in the UK now account for 3.7 per cent of gross domestic product, placing Britain ahead of countries including France, Canada and Belgium. The figure leaves the UK second only to the United States in the total amount raised from property taxes overall, despite America’s far larger market.
The report comes after a series of tax increases introduced during Keir Starmer’s government, including higher stamp duty charges for landlords and second-home buyers, rising council tax bills and reforms to business rates.
Analysts warned that Britain’s growing dependence on property taxation risks damaging investment at a time when economic confidence is already weak.
Ryan Tax Services estimated that more than £100 billion was raised last year through council tax, business rates, stamp duty and land taxes, accounting for around 11 per cent of total tax revenues.
Alex Probyn, of Ryan, said Britain was now taxing property more heavily than any comparable economy and warned the system was placing increasing strain on businesses and investors.
The findings have fuelled concerns that taxes could rise even further if Labour undergoes a leadership change.
Andy Burnham, viewed as a leading contender to replace Keir Starmer, has repeatedly argued that wealth and assets are “undertaxed”. The Greater Manchester Mayor has backed reforms to council tax bands and land valuations that could push more homeowners into higher tax brackets.
Mr Burnham has already overseen higher local property charges during his time in Manchester. Earlier this year, he announced a 20 per cent increase in the mayoral precept, adding £25 to the average Band D council tax bill.
Another potential leadership contender, former health secretary Wes Streeting, has previously supported aligning capital gains tax rates with income tax, a move that could increase liabilities for many property investors.
Business leaders and developers warned that Labour’s approach risks undermining growth, investment and housing supply.
One senior property developer said Labour had turned the housing market into “a cash machine for a Government addicted to higher taxes”.
The developer, who asked not to be named, said: “Every time Labour talks about growth, they reach for another tax on property. Investors are being punished, landlords are being squeezed out and developers are facing rising costs from every direction.
“The result is fewer homes being built, weaker investment and higher rents for ordinary people. Labour claims it wants to solve the housing crisis, but its policies are making it harder and more expensive to deliver homes across the country.
“Britain already has one of the most punitive property tax systems in the developed world. Piling on even more taxes is economically reckless and shows a complete lack of understanding about how investment actually works.
“Developers are not charities. If the Government keeps treating property as an endless source of tax revenue, capital will simply go elsewhere. Labour is creating an anti-investment climate at exactly the moment the economy needs confidence, construction and long-term growth.”
The Conservatives also seized on the report as evidence that Labour’s economic strategy is driving up costs for homeowners and businesses. Shadow Chancellor Sir Mel Stride said the tax burden was discouraging investment and weakening confidence across the economy.
The criticism comes as wider signs of economic strain continue to emerge.
The Recruitment and Employment Confederation said job postings fell by 7.7 per cent between March and April, while the number of workers securing permanent roles has now declined for 43 consecutive months.
REC chief executive Neil Carberry said political uncertainty surrounding Labour’s internal tensions, combined with instability caused by the conflict in Iran, had created a more cautious environment for employers.
Separate research from accountancy firm BDO found many medium-sized businesses were delaying investment plans amid fears that rising energy prices and higher taxes would further squeeze margins. Nearly two-thirds of firms surveyed said they planned to reduce or pause investment, while others were considering raising prices or cutting staff.
A survey by the Chartered Institute of Personnel and Development also found that around one in five employers expected to reduce headcount over the next three months.
Despite mounting criticism, the Government defended its economic policies, pointing to reforms to business rates, a £4.3 billion support package aimed at limiting bill increases and measures intended to support households and high street businesses.
Critics, however, argue Labour’s growing reliance on property taxation is choking investment and deepening economic uncertainty at a time when Britain can least afford it.
