Labour’s proposal for a new property tax will “disproportionately affect Londoners”, Compare My Move co-founder Dave Sayce reveals. 

It was reported last week that Chancellor Rachel Reeves is considering a new tax on the sale of properties worth over £500,000 as part of wider stamp duty and council tax changes.

However, normal stamp duty rates will remain for second homes. 

With the average sold price in London currently standing at just under £667,000, according to Rightmove, Sayce says the new tax could lead to an increase in the number of people leaving London for good. 

Compare My Move’s quarterly data shows that there has been a rise in the percentage of Londoners who leave London when they move. 

In Q3 2024, 34% of Londoners who moved house left Greater London, whereas so far in Q3 2025, this number has increased to 39%. 

Compare My Move co-founder and managing director Dave Sayce says: “Londoners have been finding it difficult to sell their homes for some time, with average selling prices falling year on year. Even so, the average price has not yet dropped below the proposed £500,000 threshold.”

“If the new property tax is introduced and tiered according to house prices, it will put further pressure on Londoners to reduce their asking prices. However, I don’t think cheaper properties will be enough to stop people from moving out of the capital when buying.”

“Londoners may be discouraged from buying properties just below the threshold because of concerns that their home’s value will not rise enough to cover the tax when they come to sell. There could be a price gap between houses that are selling for under £500,000 and houses selling for way over.”

“At this stage, it is unclear whether the tax will apply only to the portion of a property’s value above £500,000 or to the full value. Once this is confirmed, we will be able to predict its impact more accurately.”

“Unless the tax is adjusted to account for regional differences, London is likely to face a significant impact, with many more residents choosing to leave. I would expect the proportion of Londoners moving out to rise to over 40% once the tax is introduced, leaving sellers facing even greater difficulties.” 

The announcement last week divided opinions within the mortgage market. 

Propertymark said the new tax “must be carefully considered, fit for future purpose, and encourage the concept of homeownership for those who aspire to it”.

It highlighted that any revised system must assist first-time buyers, second steppers and those looking to right size. 

Propertymark head of policy and campaign Timothy Douglas welcomed discussions around reforming stamp duty as he says it’s a significant barrier to moving and getting people on the housing ladder.

“Economic growth can come from reducing the financial burden of stamp duty which we know increases the number of transactions, but any changes must work alongside differing property prices and the dynamic nature of our housing markets across the country.”

However, ASK Partners chief executive and co-founder Daniel Austin said the new plans are a “short-term fix” that would “do little to close the gap in public finances, stabilise the property market or support long-term economic resilience and growth”.