Barratt cuts the price of some of its most expensive London homes

* Brexit, property tax take some heat out of London market

* Commercial property companies also facing pressure

* House prices a divisive issue for Britons (Adds details, background, British Land)

By Costas Pitas

LONDON, Nov 16 (Reuters) - Britain's biggest housebuilder Barratt said it was cutting the price of some of its most expensive London homes by up to 10 percent in the latest sign that the market has cooled after property tax increases and the Brexit vote.

After an initial dip following the June 23 referendum, demand for new homes in most of Britain, including outer London, has bounced back according to builders and surveys, but it remains weak in the capital's wealthiest central areas.

The Brexit vote followed an increase in property tax on buy-to-let and second homes which particularly affected central London. Some prospective buyers are investors seeking a rental income and have bought cheaper homes instead or pushed for price cuts to offset higher taxes.

"We do recognise that at price points about 600,000 pounds ($750,009), particularly at price points once you move above 1 million, the (London) market is clearly slower," Barratt CEO David Thomas told Reuters.

"You are seeing commentary about prices backing off year-on-year on a 5 to 10 percent basis so I think that it's in that sort of order," he added.

The vote to leave the EU will contribute to a 9 percent fall in prices in prime central London, which includes mansions and luxury apartments in Knightsbridge, Notting Hill and Chelsea, according to estate agents Savills.

Thomas attributed the softening London market to more homes coming to market and the increase in stamp duty, property tax, rather than the EU vote.

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House prices are key to consumer confidence in Britain, where many gauge the strength of the economy by rises in the value of their most valuable asset. However, complaints about the affordability of homes have risen to the top of the political agenda.

The average price of houses in Britain is around 220,000 pounds, with many struggling to buy, particularly in the capital where prices are much higher.

While Britain's largest housebuilders have reported strong growth in recent months, there have been mixed signs on the progress of Britain's commercial property market, which was first to be hit by Brexit as investors pulled cash from funds.

London-based property company British Land, which specialises in retail and office space, said on Wednesday the value of its portfolio fell 3 percent in the six months to the end of September.

Shares in Barratt fell 2.8 percent to 469 pence at 1053 GMT and shares in British Land were down 2.1 percent to 593 pence.

Barratt, which operates across the country, said it remained on track to hit a key financial target for return on capital as increased sales in northern and central England helped compensate for a cooling market in London's priciest postcodes. ($1 = 0.8031 pounds) (Reporting by Costas Pitas; editing by Keith Weir)