RBC BlueBay Asset Management, which manages more than £420bn in client assets, has grown cautious on sterling over fears that the government could raise property taxes in southern England, according to IndexBox. Mike Bell, the firm’s head of market strategy, said the pound is sensitive to falling house prices — a scenario that could unfold if taxes on homes rise, since high mortgage rates combined with higher property taxes, particularly in the South, could push prices down.
Andy Burnham has floated changes to how council tax is calculated to shift more of the burden onto southern England, telling the BBC last month he wants “more fairness” for the north, and noting that Greater Manchester residents often pay higher council tax than owners of larger homes in London. He has ruled out replacing council tax with a land-value tax, but his comments point to a possible recalculation method aimed at raising more revenue from the South.
Citing The Telegraph, IndexBox reported that Labour is planning an £18bn tax increase affecting millions of families across England, with the national council tax take projected to rise 43% by 2030 — adding an average of £500 to bills by the end of the decade. The Conservatives have labelled the change the “Burnham premium,” saying it would hit 25.6 million homes and raise bills in every postcode.
Bell added that housing demand in the South is already weak given current mortgage rates, and any further tax-driven downward pressure on house prices could weigh on the currency, particularly in the South and London.
References
IndexBox, citing RBC BlueBay Asset Management and The Telegraph — Andy Burnham Council Tax Warning Could Weaken Pound, RBC BlueBay Says
