UK property taxes are the highest of any major economy and risk squeezing investment across the country, a new analysis has found.
The UK ranks first globally for property taxes as a share of gross domestic product (GDP), second for total property tax revenue, and among the highest for property taxes as a share of overall tax revenue, according to global tax firm Ryan’s 2026 Annual Business Rates Review.
Taxes on property stand at 3.7 per cent of GDP, higher than France (3.4 per cent), Canada (3.4 per cent) and Belgium (3.2 per cent).
In terms of overall revenue raised through property taxes, the UK raised $136.2 billion, sitting behind only the United States ($854.6 billion) and ahead of Japan ($108.4 billion), France ($107.3 billion) and Canada ($75.3 billion).
The UK’s reliance on property taxation leaves it more “structurally exposed” than other countries, relying on it as a “core and growing source of taxation revenue”, the report said.
Stamp duty, business rates and council tax have risen during Keir Starmer’s two years as prime minister as the economy has stagnated, with expectations taxes would rise further if he is replaced by Andy Burnham or Angela Rayner. Wes Streeting, the other likely candidate, has called for capital gains tax to be levied at the same rate as income tax, which could affect property investment.
Tax receipts continue to rise due to inflation-linked increases, policy changes and the withdrawal of Covid-era reliefs.
Business rates receipts are also forecast to rise to £37.1 billion across the UK for 2026/27, up from £33.6 billion the previous year, following revaluations in England, Wales and Scotland.
The government has announced targeted business rates support for pubs and music venues, but many other sectors, such as hotels, have warned over predicted rises in their property tax bills.
Alex Probyn, practice leader for Europe and Asia-Pacific property tax at Ryan, said: “The UK sits at the very top of global rankings for property tax. That is not a marginal difference but it reflects a system where property is taxed more heavily than in any other comparable economy.
“The result is that business property is carrying a disproportionate share of the overall tax burden, and that is beginning to weigh heavily on investment, particularly in sectors that rely on physical assets and long-term capital.”
Property taxes made up 10.9 per cent of the total tax revenue in the UK, behind Korea (11.8 per cent) and the US (11.4 per cent).
Ryan’s said it has become so deeply embedded within the economy that there is limited scope for reform without wider tax changes, which increases the risk that businesses bear a growing share of the burden. Mr Probyn said the issues were “structural”.
“Property taxes in the UK are the highest by international standards, and the system is designed in a way that continues to increase the yield over time,” he said.
“That creates a clear tension between the need to raise revenue and the need to support investment. That balance has to be addressed.”
The average price tag on a home jumped by £4,333 month-on-month in May amid “surprisingly strong” market confidence, according to property website Rightmove.
Across Britain, the typical price of a home coming to market increased by 1.2 per cent to reach £378,304, Rightmove said.
The increase was stronger than the average 1 per cent month-on-month rise seen in May in recent years, the website added.
Despite the increase, average prices have fallen by 0.3 per cent since May 2025, the report said.
It said asking prices in the more affordable North East (up 2.7 per cent) and North West (up 2.6 per cent) of England are continuing to increase annually, while they are falling in London (down 2.4 per cent) and the South East (down 1.6 per cent).
This uneven price performance is unfolding as buyers experience an 11-year high for choice, with the highest number of homes for sale at this time of year since 2015, the report said.
Colleen Babcock, property expert at Rightmove, said: “It’s normal to see asking prices pick up as we move through the spring selling season.
“What’s notable this month is that activity in the market is staying fairly steady, even with ongoing cost‑of‑living pressures and wider global uncertainty.
“The number of sales agreed is holding up well, consistent with trends we’ve seen in 2026 so far.
“However, this overall positive national monthly snapshot masks a North-South divide in year-on-year seller pricing power.”
Property firm Hamptons said investor activity in housing has picked up sharply this year as higher mortgage rates and the Renters’ Rights Act prompted a reshuffling of the rental market. The act gives private tenants in England stronger rights and protections.
The rise in buying activity has predominantly been driven by bigger investors buying from smaller landlords, Hamptons said.
Faced with higher borrowing costs and increased regulation, some landlords have chosen to exit the sector, according to the property firm.
Rental price growth also continued to accelerate in April, Hamptons said. Tenants moving into homes paid 1.9 per cent more on average than a year earlier, taking the average rent across Britain to £1,396 per month.
This was the fifth month in a row in which the pace of rental growth has strengthened, with rents rising at the fastest rate in 11 months, Hamptons said.
