Hot Air? Agency warns emissions tax could hurt capital values

A prominent lettings agency says capital values could be damaged if a controversial emissions scheme goes ahead in London.

Research by Benham and Reeves shows that the initial London ULEZ - Ultra Low Emission Zone - pilot scheme which launched in  2019 had little impact on house prices.

At that time ULEZ covered a similar area to the existing Congestion Charge Zone and in the year that followed its introduction average house prices increased by 5.9 per cent in ULEZ-impacted boroughs versus 1.4 per cent growth across London as whole.

The agency claims this price resilience can be attributed to the fact that homeowners were already accustomed to the Congestion Charge, with personal car usage low in any case due to the dominance of public transport

But it says an expansion of ULEZ in autumn 2021 prompted price problems for landlords and other home owners. 

The impacted London boroughs experienced an average price growth of 5.3 per cent over the 12 months following the 2021 expansion - lower than the wider London performance of 5.7 per cent. 

Now Benham and Reeves claims the next expansion - due in August - may make an already-subdued London market see price falls. 

Agency director Marc von Grundherr comments: “Many Londoners rely on their cars to hold down jobs and care for their families, and yet another tax attack will hit them financially at a time when millions are already struggling with the high cost of living. 

“The figures show that ULEZ impacted boroughs have trailed the wider London market by around half a percent when it comes to house price growth in the year following the ULEZ rollout, which accounts to well over £2,000 on the average London home. 

“When the scheme launches across the entirety of the capital, this could see London homeowners out of pocket by thousands of pounds and those in the most peripheral boroughs could be hit far harder.

“So not only do they face the cost of either paying this latest tax grab or replacing their car, but their property’s value could also be negatively impacted.”