Andy Burnham is being urged by London experts not to press ahead with a new property tax which he has previously backed.
The Centre for London is warning that if he did this would mean people who own a £600,000 home in the capital seeing their property tax bill going up by £812.
The think tank supports landmark reform of the property taxation system.
But it believes that new Prime Minister Mr Burnham has supported the wrong scheme and that it would be damaging to the capital which could be hit with an additional £7.5 billion bill.
The former Mayor of Greater Manchester has in the past backed the Fairer Share Campaign to replace council tax and stamp duty with a new tax charged at 0.48% of the value of a property.
It would rise to 0.96% for second homes, empty properties and those owned by foreign nationals.
The Centre for London stressed that such a flat rate national proportional property tax would mean for a London home, worth around £600,000, a bill of £2,880 a year, or some £812 more than the average Band D Council Tax bill.
It is proposing an alternative model, also replacing council tax and stamp duty, which would cut this increase to around £272 annually.
Even this rise, though, is likely to prove politically controversial.
Its proposals would also mean bigger increases in property tax on higher value homes.
They would also bring in an additional £912 million a year to boost spending on social housebuilding in London.
The Centre for London plan would see homes worth up to £800,000 pay 0.39% of the property value each year.
The rate would gradually rise to 0.43% on properties worth £5 million or more.
Unlike a flat-rate system, the Centre for London blueprint would be made up of three rates:
* A national rate set by central government applying to all residential dwellings in England
* A local rate set by the local authority - boroughs in London - applying to all residential dwellings in the area
* A regional rate set in the capital by the London Mayor
It estimates that for the reforms to be revenue neutral, the overall average rate outside London would have to be 0.8%, comprised of a 0.07% national rate and an average local and regional rate of 0.73%.
London’s high property values, though, would mean that replacement rates would be lower in the capital, even if house prices are currently falling.
An average effective rate of 0.39% would raise a total of £6.8 billion for local and regional government a year, according to the analysis, while bringing in an additional £912 million annually through higher rates on the most valuable properties.
Criticising the flat-rate proposal, Antonia Jennings, chief executive at Centre for London, said: “This approach would hike up bills for many London households, while removing one of the few remaining tax-setting powers available to local government through council tax.
“That would represent a step backwards in the fight for more local control of taxes and is out of step with Andy Burnham’s commitment to devolution.”
She added: “Centre for London’s proposal offers a better alternative.
“It’s designed so those with greatest housing wealth contribute more, while avoiding unfair penalties for households whose homes are more expensive simply due to London’s inflated housing market.
“Crucially, it would also preserve rate-setting powers at local, regional and national level, strengthening democratic accountability rather than centralising it.”
The think tank argues that the current property tax system is broken, with stamp duty discouraging people from moving and council tax being “outdated” and based on property values set decades ago.
