Country Market Faces Third Successive Summer of Tax Uncertainty

A third consecutive summer of property tax speculation suggests the next government doesn’t understand the crucial role played by confidence in the housing market any better than the last administration.

Andy Burnham isn’t Prime Minister yet, but the early signs point to an underappreciation of how people can respond to uncertainty.

One example has been his failure to rule out an exit tax, which means some wealthy overseas investors will have accelerated plans to leave the UK.

Meanwhile, floating trial balloons about a land value tax, capital gains tax reform, or tweaks to high-value council tax bands will keep a lid on property market activity. 

Implementing a land value tax to replace stamp duty and council tax is more of a long-term wish than a short-term plan, but that reality may get lost in the blizzard of headlines. 

The mood of speculation has intensified as Burnham prepares to succeed Keir Starmer and take the Labour Party further into its soft-left political comfort zone.

The timing of the transition on Downing Street is unfortunate given there have been tentative signs that activity is picking up as the Middle East conflict de-escalates and mortgage rates edge lower. The slightly improved picture was apparent last week in the latest data from Halifax and the RICS. That said, it still remains to be seen to what extent the current round of hostilities escalates.

The prime London market has suffered as political uncertainty mounts, as we explored last week, and there has been a similar reaction in higher-value markets outside the capital.

Country Market Awaits Clarity from Burnham

The Country market, which covers a range of urban and rural properties above £750,000 outside London, is bracing itself for a new Prime Minister and Chancellor, said James Cleland, head of Country sales at Knight Frank.

“All the metrics point towards nervousness from buyers as to what the Burnham premiership will bring and the sooner there is clarity on his policy platform, particularly in relation to property, the better,” he said.

Average prices in the Country fell 5% in the year to June, which was slightly narrower than the decline of 5.5% recorded in March. The average value of town houses fell 4.9%, highlighting the relative strength of urban needs-driven markets compared to more rural locations.

Meanwhile, the number of exchanges in the first six months of this year was 10% lower than 2025, while the number of new prospective buyers registering was down by 14%.

“Sensible pricing remains key in the country market and vendors who are practical in this respect are achieving competitive bidding and good sales. Stock levels are strong and there are some great houses on the market, which should catch the eye of a ready-to-commit buyer,” said James.  

Underlying demand is strong but for momentum to return and stamp duty receipts to grow, buyers and sellers need six quiet months. 

They have become somewhat hardened to volatility, as I discuss on a recent episode of Housing Unpacked with the head of lending at private bank Coutts, which is good, as market-moving headlines appear here to stay.