Londoners may face higher property tax bills under new proposals aimed at modernizing England's property tax system. A report by the Resolution Foundation suggests replacing the current council tax and stamp duty with a new tax based on the value of residential properties. The think tank argues that London households underpaid property taxes by £3.1 billion in the 2024-2025 financial year due to an outdated valuation system. The proposed "proportional property tax" would apply a flat rate of 0.7 per cent of a property's value, introduced gradually over four years. Under this plan, 80 per cent of London households would see an increase in their bills, with the top 20 per cent of households facing an average annual rise of £950. Meanwhile, nearly two-thirds of London households would pay at least £250 more, but 20 per cent of low-income single residents could see their bills reduced through expanded rebates. The current system, which has been in place since the 1990s, divides properties into bands based on their value at the time of assessment. This has led to disparities, such as a standard home in Blackpool paying nearly £600 more in council tax than a £10 million property in Mayfair. The Resolution Foundation criticizes the existing system as "terribly designed, grossly unfair and economically harmful." The proposed changes aim to correct this imbalance, ensuring that property owners pay taxes in proportion to the value of their homes, rather than the outdated banding system. Outside London, the report finds that by 2030-2031, 61 per cent of households will be overpaying their property taxes, with the figure rising to 85 per cent in the North East. On average, households in the North East would save £710 annually under the new system. The current council tax structure has been criticized for failing to reflect the rising property values in London compared to the rest of the country, resulting in unfair financial burdens on residents outside the capital. Earlier this year, former chancellor Rachel Reeves introduced a "mansion tax," requiring owners of properties valued over £2 million to pay up to £7,500 annually starting in April. However, the Resolution Foundation argues that this change alone will not significantly boost government revenue, estimating it will generate about £400 million per year. Reports suggest that Prime Minister Andy Burnham may consider lowering the threshold to include properties worth at least £1.5 million, which could double the revenue to £800 million and affect nearly twice as many properties. A government spokesperson confirmed that reforms have been made to address the unfairness in the system, but emphasized that final decisions on tax policies are the responsibility of the chancellor to announce during official fiscal events.