The radical plans put forward by the Institute for Public Policy Research (IPPR) would see households pay yearly property taxes based on the current market price of their home.

It argued the move would help reduce wealth inequality between those who own a home and those who don’t.

The think tank claimed housing is currently “undertaxed” relative to other assets, distorting investment behaviour and contributing to inequality between homeowners and renters.

A property tax rate of 0.5 per cent would mean an annual tax bill of £1,243 for the owner of an averagely priced UK home valued at £248,611, the IPPR said.

The think tank claimed if the new property tax was set at 0.5 per cent it would raise at least as much as current council taxes. …

Carys Roberts, senior economist at IPPR, said: “Council tax is a regressive tax as it falls disproportionately on those with lower incomes and wealth.

“It’s also outdated, as it’s based on valuations that have not been updated since 1992.

“A new new property tax would be far more progressive, and would effectively capture increases in house prices in a way the current system does not.”