Property Tax: Revenue Methodology and Data Sources

Overview of the Validation Exercise

This appendix documents the data sources, calculation methodology, assumptions, and remaining limitations for each component of the revenue model.

Data Sources

Five primary data files underpin the validation, each drawn from official UK government statistical publications.

House Price Statistics for Small Areas (HPSSA), Dataset 9 (ONS). This dataset provides median house prices by local authority and English region for the year ending March 2023. It is the most granular official source for regional house price medians. The national weighted median of approximately £290,000 was computed by weighting each region's median price by its share of private dwelling stock. The London and South East weighted median of £453,398 and the Rest of England weighted median of £234,373 were derived using the same weighting procedure. Median prices were used rather than mean prices because they are more resistant to distortion by very high-value outliers, though this choice means the aggregate stock valuation is conservative relative to a mean-based estimate.

Live Table 109: Dwelling Stock by Tenure (DLUHC). This table provides the number of dwellings by tenure type (owner-occupied, private rented, local authority, housing association) for each English region, updated annually. The private dwelling count (owner-occupied plus private rented) totals 21.4 million for England. The UK-wide estimate of 25.2 million private dwellings incorporates published Scottish and Northern Irish totals and an estimate for Wales based on national housing statistics. The dwelling stock figures are used both as the tax base (number of properties subject to the new tax) and as the weighting variable for computing regional median prices and aggregate stock values.

Stamp Duty Land Tax Statistics 2024–25, Tables 5a and 6a (HMRC). Table 5a provides residential SDLT transactions, property values, and receipts by English region and Northern Ireland. Table 6a provides the total residential and non-residential breakdown by price band. The key finding is that London and the South East account for 60.0% of residential SDLT receipts (£6,225 million of £10,380 million).

Council Taxbase Statistical Collection, October 2025 (DLUHC). Three tables from this collection were used. Table 1.01 provides the total number of dwellings on the Council Tax valuation list by band (A through H) for each English local authority, aggregated to regional level. The England total is 25,817,220, which serves as an independent cross-check against the dwelling stock estimates from Live Table 109. Table 1.07 provides the number of chargeable dwellings adjusted for disabled relief. Table 1.11 provides the count of second homes by region (267,894 in England). This dataset enables both the median Council Tax calculation and the second home surcharge revenue estimate.

SDLT Elasticity Research (OBR, 2017). The OBR's 2017 analysis of Stamp Duty elasticities provides the principal evidence base for estimating potential behavioural responses to SDLT abolition. While the current model uses static revenue estimates, this research suggests that abolishing SDLT could increase housing transactions by between 8% and 20%, depending on price band and region. This represents an omitted upside factor in the current estimates, noted but not incorporated.

Calculation Methodology

Aggregate Stock Valuation

The aggregate value of the private housing stock is estimated using a bottom-up regional approach:

For each of the nine English regions, the regional median house price (from HPSSA Dataset 9) is multiplied by the regional private dwelling count (from Live Table 109). The nine regional products are summed to produce the England-wide median-basis stock value. This yields approximately £7.35 trillion. The UK-wide figure adjusts for Scotland, Wales, and Northern Ireland using national-level median prices and dwelling estimates.

A conservative policy assumption of £7.0 trillion is adopted for the headline revenue calculations. This represents a 5% discount to the median-basis estimate, providing a margin against valuation uncertainty and the possibility that median prices overstate the value of the lower end of the distribution while understating high-value properties in ways that may not net out precisely.

The dwelling count of 25.2 million (UK-wide) is explicitly "owner-occupied plus privately rented”. The housing stock valuation was derived by taking the ONS total residential value (£8.5–9T) and deducting roughly £1.2–1.5T for social housing; the median-basis calculation yields £7,346 billion. Residential SDLT revenue in HMRC data shows £10.4 billion. The SDLT regional split is 60% London and South East. The median effective Council Tax is £1,689. The net fiscal surplus validated figure is £19 billion.

The latest whole-market estimate puts the total value of UK housing stock at a record £9.10 trillion at end-2024 (Savills), above the £8.50 to £9.00 trillion ONS-derived figure used here. Applying the same social-housing deduction and 1 per cent rate to that higher stock value yields net new revenue of approximately £20.00 billion. The net figure is therefore best read as a range of £18.00 billion to £20.00 billion, with the published £18.10 billion at the conservative end, consistent with the median-basis valuation and the 5 per cent policy discount adopted throughout.

Property Tax Revenue

Gross annual revenue is calculated as the product of the tax rate (1%) and the aggregate stock value. On the conservative basis: £7,000 billion × 0.01 = £70.0 billion. On the validated median basis: £7,346 billion × 0.01 = £73.5 billion.

The regional split is computed by applying the 1% rate to the regional stock values. London and the South East (aggregate stock value £2,998 billion on the median basis) generate £30.0 billion. The rest of England (£4,348 billion) generates £43.5 billion.

Taxes Replaced

Council Tax revenue of £45 billion is taken from DLUHC Council Tax statistics for 2024–25. The regional split is estimated by weighting each region's dwelling count by its effective median Council Tax (see below), producing £12.8 billion for London and the South East and £32.2 billion for the rest of England.

Residential SDLT revenue of £10.4 billion and its regional split (£6.2 billion London and South East, £4.2 billion rest of England) are taken directly from HMRC Table 5a.

Median Council Tax Calculation

The effective median Council Tax is derived from the band distribution of dwellings in each region using the following procedure:

1. The number of dwellings in each Council Tax band (A through H) is extracted from Table 1.01 of the Council Taxbase collection for each English region.

2. The Council Tax charge for each band is calculated by applying the statutory band ratio to the regional Band D rate. The ratios are: Band A = 6/9 of Band D; Band B = 7/9; Band C = 8/9; Band D = 1; Band E = 11/9; Band F = 13/9; Band G = 15/9; Band H = 2. Band D rates used are: London £1,899; South East £2,152; national average £2,065.

3. The median band is identified as the band containing the cumulative 50th percentile of the dwelling distribution. For England as a whole, this is Band B. For London, it is Band D. For the South East, it is Band C.

4. The median Council Tax charge is the Band D rate multiplied by the median band ratio for each region.

5. An 8% effective discount is applied to derive the amount actually paid. This discount reflects the fact that approximately 33% of households receive a 25% single-person discount, yielding an effective average discount of 8% across all dwellings.

6. Regional aggregates (London plus South East, rest of England) are computed as dwelling-weighted averages of the constituent regional medians.

The resulting effective median Council Tax figures are: England £1,689 per year; London and South East £1,754; rest of England £1,571.

Household-Level Impact

The median annual increase for each regional grouping is calculated as the difference between the new property tax (regional median house price × 1%) and the effective median Council Tax currently paid. This calculation does not incorporate the loss of Stamp Duty, which is a transaction tax paid only on purchase and therefore does not directly offset the annual property tax at the household level (though it does affect the net fiscal position at the aggregate level).

Second Home Surcharge Revenue

The surcharge revenue is estimated by multiplying the count of second homes in each region (from Table 1.11) by the regional median house price (from HPSSA Dataset 9) and by the surcharge rate. At an example surcharge factor of 2 (meaning second homes pay 2% total — the standard 1% plus an additional 1%), the estimated surcharge revenue is approximately £0.9 billion for England. This is a lower bound because second homes are likely to have above-median values.

Remaining Data Gaps

Four data gaps remain, none of which is critical to the core fiscal analysis:

Scotland and Northern Ireland official dwelling counts by tenure are not available in the same format as the English Live Tables. The current estimates use published national totals with assumed tenure splits based on English proportions. Wales Council Tax equivalent data is treated similarly. These gaps affect the UK-wide totals but not the English regional analysis, which drives the distributional conclusions.

Actual mean house prices by region would provide a more accurate aggregate stock valuation than median prices, which by construction understate the contribution of the right tail of the price distribution. ONS and OBR publish aggregate statistics that could support a mean-based estimate, but this has not been incorporated in the current version.

Behavioural responses to SDLT abolition have not been modelled. The OBR's 2017 elasticity research is available in the project data files and could support a dynamic revenue estimate in future iterations. This would likely show additional revenue from increased transaction volumes and associated taxes (VAT on moving services, income tax on estate agent and solicitor fees, etc.).

Collection rates and administrative costs for the new property tax have not been estimated. Council Tax collection rates in England average approximately 97%, and there is no strong reason to expect a materially different rate for a property tax levied through the same billing infrastructure, but this assumption has not been formally tested.

Source File Reference