Wealth manager Rathbones has sounded the alarm over Labour’s reported plans to raise new property taxes, calling them “the final nail in the coffin” for property as an investment.

According to reports, the Treasury is considering a range of measures ahead of the Budget, including:

• A levy on homes sold for more than £500,000

• Applying National Insurance to rental income

• A possible overhaul of council tax

Rathbones says it has seen a sharp increase in concerned clients with property portfolios.

Charlie Newsome, divisional director at Rathbones, said: “Far from being ‘safe as houses’, the investment case for residential property has shifted dramatically. Slower price growth, higher borrowing costs and increasing regulation have combined to erode the appeal of property as an asset class. A new property tax could be the last nail in the coffin and cause potentially tens of thousands of people planning for retirement to rethink their strategy.”

Newsome warned that a tax scaled to property values could deepen the housing crisis by penalising homeowners in high-priced urban areas more than wealthier owners in lower-value rural regions.

While second and holiday homes may still hold lifestyle appeal, their investment case has “weakened significantly,” he added, suggesting investors look instead to equity markets, which have consistently outperformed property in recent years.

Rathbones’ own analysis found that residential property has failed to keep pace with inflation, returning 3.7% annually between 2016 and 2024, against inflation at 3.8%. In London, historically the strongest performer, price growth averaged just 1.3% a year.

By contrast, equities have delivered stronger and more consistent returns. Over the same period, global equity markets generated average annual gains of around 7%, nearly double the pace of property, with the added benefit of liquidity and diversification. For long-term investors, Rathbones argues, a balanced portfolio that blends equities with other assets offers a more reliable path to growth.

Earlier generations saw housing as the cornerstone of wealth, but Rathbones says the so-called golden age of property investment is “firmly over.”