New Taxes Cooled London’s Housing Market. Could That Happen in New York...

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New Taxes Cooled London’s Housing Market. Could That Happen in New York?

Economists and real estate agents are calling London’s taxation of wealthy property owners a cautionary tale for New York, where leaders have endorsed a second-home tax.

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As New York’s leaders push for a second-home tax on the superrich, eyes are turning to London, which has made similar moves in the last decade.

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Sam Bush for The New York Times

By

Debra Kamin

April 25, 2026,

5:02 a.m. ET

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Gov. Kathy Hochul’s plan for a yearly surcharge on second homes in New York City worth $5 million or more could be an elegant political move — one that taxes the rich who don’t live in the city full-time.

If approved, the so-called pied-à-terre tax will be a populist win that avoids levying new taxes on constituents of Ms. Hochul and Mayor Zohran Mamdani of New York.

But real estate agents and economists say the tax could be catastrophic for the city’s housing market, hurting not the superrich investors who park their money here, but the very middle- and lower-income citizens it’s designed to benefit.

For proof, they say, just look at London.

A slew of punishing new taxes has transformed London’s luxury housing market over the last decade. The taxes have pushed housing values down and driven international buyers, who have historically made up nearly half of the homeowners in prime London neighborhoods, to consider other markets.

The once-sizzling housing market in central London is now chilled. Sales prices of properties in London have dropped more than 20 percent since 2015. As taxes mounted and prices dipped, smaller landlords threw in the towel, taking tens of thousands of apartments off the market and constricting supply. Average monthly rents, as a result, are now at record highs.

A similar blowback could be the consequence of Ms. Hochul’s proposal that Mr. Mamdani has gleefully promoted, the economists and real estate agents warn.

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