Proposals from Labour leadership candidates could impact property investment and mortgage rates, according to analysis from Knight Frank, as the contest to replace the party leader intensifies.
Andy Burnham has supported proposals for an additional council tax levy on overseas owners of homes valued above £2 million, while Wes Streeting has advocated aligning Capital Gains Tax rates with income tax rates. The policy positions emerge as candidates seek to appeal to party members and union supporters during the leadership contest.
Market implications
Tom Bill, Head of UK Residential Research at Knight Frank, stated that the property tax debate “is not helpful for a country trying to attract global talent and investment”. He noted that the proposals could compound existing concerns among international buyers and investors following the abolition of non-dom status and increased Stamp Duty costs.
Leslie MacLeod-Miller, Chief Executive of Foreign Investors for Britain, commented: “The UK needs to demonstrate it is open for business and wants to attract talent on a competitive global stage. It’s either a question of growth or tax.”
Bill added that bond markets are pricing in risks associated with potential policy directions, with growing concern about higher borrowing, taxation and spending contributing to expectations that mortgage rates could remain elevated. Financial pressures linked to the Middle East conflict are also influencing these projections.
Rental sector concerns
The proposed Capital Gains Tax changes, combined with the Renters’ Rights Act and stricter Minimum Energy Efficiency Standards, could accelerate landlord exits from the market, according to Bill. Further landlord departures would reduce rental supply and increase upward pressure on rents, adding to existing compliance challenges facing landlords.
Prime London data
Data from LonRes indicates the prime central London market is experiencing pressure. During the first four months of 2026, exchanges above £5 million were 18% below the five-year average. Average prices in the market declined 3.8% annually in April and are now 22% below their 2015 peak.
The policy debate comes as the property sector navigates multiple regulatory changes and market uncertainties, with potential implications for both domestic and international investment flows into UK residential property.
