Reeves to target high-value properties with council tax reforms amid London market downturn

UK Finance Minister Rachel Reeves is considering modifying council tax bands to raise revenue and address fiscal shortfalls, risking further impact on London’s volatile property market amid a 36% decline since 2018.

The City of London has experienced a substantial decline in average property prices, dropping 36 percent since 2018, highlighting significant shifts in the capital’s real estate market. Amidst this backdrop, UK Finance Minister Rachel Reeves is reportedly considering reforms to council tax payments, targeting owners of more expensive houses to help address an estimated £20 billion shortfall in the Treasury’s finances. According to individuals familiar with the matter, Reeves’ approach may favour adjusting council tax bands rather than imposing direct sales taxes on costly properties, which experts caution could stall the housing market by deterring transactions.

The current council tax framework relies on property valuations dating back to the 1990s, a system increasingly criticised for its misalignment with modern property values—particularly in cities like London where house prices have surged. This anomaly has resulted in some owners of multi-million-pound estates paying similar council tax rates as those in modest terraced houses in smaller towns. Revising the tax bands to reflect higher market values, including potentially doubling rates on properties in the highest bands, is projected to generate additional revenue in the low billions. The Institute for Fiscal Studies (IFS) estimates such a “supercharged” council tax on high-value properties could raise around £4.2 billion.

Reeves has flagged plans to underscore higher taxes on wealthier individuals in the forthcoming Budget on November 26, as part of her broader fiscal strategy. While Labour has pledged to refrain from increasing income tax, VAT, or National Insurance, her budget is expected to include various measures targeting wealthier segments, including reforms to capital gains tax and inheritance tax parameters. These proposals come amid mounting pressure to plug a growing deficit in public finances worsened by slow GDP growth and sustained inflation.

The potential council tax reform aligns with longstanding debates over property taxation in the UK. Former Chancellor George Osborne supported similar reforms, though they were later shelved under David Cameron’s leadership. Current discussions emphasise administrative simplicity, aiming to develop a system that is both fairer and easier to manage, while minimizing distortions in the housing market.

Industry analysts warn that changes to property taxation could further challenge London’s real estate dynamics, where prices remain disproportionately high relative to the rest of the country. Property experts such as Peter Graham from RSM UK suggest London risks becoming less attractive to young professionals as rising costs push them away, potentially slowing the pace of housing transactions and prompting sellers to delay moves or downsizing.

London’s property market has endured notable volatility over recent years. Data reveals that prime London properties suffered significant price reductions around 2018, exacerbated by political and economic uncertainties tied to Brexit. For instance, buyers using US dollars enjoyed substantial price advantages during that period due to sterling depreciation. More recently, despite some stabilisation in key areas like Canary Wharf—where property values hovered around £6.75 billion in early 2024 after pandemic-related declines—challenges remain, including high office vacancy rates and major tenants relocating to more central locations. These factors contribute to considerable uncertainties impacting property valuations and transaction volumes.

In response to these market complexities, the IFS advocates for comprehensive tax reform rather than isolated rate hikes. In its analysis, the IFS underscores the limitations and risks of simply increasing existing tax rates and suggests more nuanced approaches, such as restructuring property taxes to focus on wealth and adjusting local tax burdens based on regional house price growth. The Institute also advises caution regarding proposals like an annual wealth tax, which has support within some Labour circles but is viewed skeptically by tax experts.

Beyond council tax considerations, government officials are exploring the replacement of stamp duty on owner-occupied homes with a new form of property tax—the so-called “homes tax.” This levy would mostly impact owners in London and the South East, where average house prices significantly outstrip the national average. The proposal would tax owner-occupiers on homes valued above £500,000 upon sale, with rates calibrated to property value. Although no final decisions have been made, this tax could form the basis for future local levies designed to eventually supplant council tax.

As the November Budget approaches, all eyes remain on Reeves’ announcements, which will signal the government’s approach to balancing fiscal responsibility with maintaining a healthy housing market. While reforms targeting wealthier property owners are widely anticipated, policy-makers face the delicate task of crafting measures that raise necessary revenues without unduly discouraging market activity or exacerbating London’s housing affordability issues.

📌 Reference Map:

• Paragraph 1 – ^[1] (Facilities Management Now), ^[2] (Reuters)
• Paragraph 2 – ^[1] (Facilities Management Now), ^[5] (Reuters)
• Paragraph 3 – ^[1] (Facilities Management Now), ^[3] (MoneyWeek)
• Paragraph 4 – ^[1] (Facilities Management Now), ^[5] (Reuters)
• Paragraph 5 – ^[1] (Facilities Management Now)
• Paragraph 6 – ^[1] (Facilities Management Now), ^[4] (Reuters)
• Paragraph 7 – ^[6] (CNBC), ^[4] (Reuters)
• Paragraph 8 – ^[5] (Reuters)
• Paragraph 9 – ^[7] (The National News), ^[1] (Facilities Management Now)
• Paragraph 10 – ^[1] (Facilities Management Now), ^[5] (Reuters)

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 presents recent developments regarding Chancellor Rachel Reeves’ proposed property tax reforms, with references to reports from late October 2025. The earliest known publication date of similar content is October 12, 2025, when the Institute for Fiscal Studies urged Reeves to implement comprehensive tax reforms in her upcoming November budget. ([reuters.com](https://www.reuters.com/world/uk/uks-reeves-should-use-budget-reform-tax-system-ifs-says-2025-10-12/?utm_source=openai)) The Facilities Management Now article appears to be a republished version of this earlier report, with the same publication date and similar content. This suggests that the narrative may be recycled, potentially affecting its freshness score. Additionally, the Facilities Management Now article includes a reference map linking to other reputable sources, indicating an attempt to provide updated information. However, the reliance on a single source and the lack of new insights may still warrant a lower freshness score.

Quotes check

Score:
7

Notes:
The narrative includes direct quotes attributed to individuals familiar with the matter, stating that Chancellor Rachel Reeves is considering reforms to council tax payments targeting owners of more expensive houses. However, these quotes are not directly attributed to specific individuals or sources, making it challenging to verify their authenticity. Without clear attribution, it’s difficult to assess whether these quotes are original or have been used in previous reports. The lack of verifiable sources for these quotes raises concerns about their credibility.

Source reliability

Score:
6

Notes:
The Facilities Management Now article appears to be a republished version of an earlier report from Reuters, with the same publication date and similar content. This suggests that the narrative may originate from a single source, potentially affecting its reliability. The lack of direct attribution for quotes and the reliance on a single source further raise concerns about the credibility of the information presented.

Plausability check

Score:
8

Notes:
The narrative discusses proposed property tax reforms by Chancellor Rachel Reeves, including potential changes to council tax payments targeting owners of more expensive houses. These proposals align with recent discussions and reports from reputable sources, such as the Institute for Fiscal Studies urging comprehensive tax reforms. ([reuters.com](https://www.reuters.com/world/uk/uks-reeves-should-use-budget-reform-tax-system-ifs-says-2025-10-12/?utm_source=openai)) However, the lack of direct attribution for quotes and the reliance on a single source raise questions about the authenticity and originality of the information presented.

Overall assessment

Verdict (FAIL, OPEN, PASS): FAIL

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary:
The narrative appears to be a recycled version of an earlier report from Reuters, with similar content and publication date. The lack of direct attribution for quotes and the reliance on a single source raise concerns about the originality and reliability of the information presented. While the proposed property tax reforms discussed are plausible and align with recent discussions, the issues with source reliability and potential recycling of content lead to a ‘FAIL’ verdict with medium confidence.