Labour outlines plans for new property taxes
A Labour government would seek to bring in a progressive property tax to replace council tax and eradicate stamp duty for those buying property to live in themselves.
This would be payable by owners rather than tenants, and empty homes and second homes would be taxed at a higher rate, along with the capital gains earned from second homes and investment properties, details a report published by the party. It also suggests that business rates should be replaced with a land value tax.
Entitled Land for the Many, Labour’s latest paper argues that that land values have risen by 544 per cent since 1995, and by 2016, make up 70 per cent of the price of a home. This, the paper says, along with the practice of land banking and other forms of owning and controlling land, has caused house prices to explode beyond the means of many people.
The report ranges wide and includes ideas for much reform, from the way land is sold to the type of houses built.
As well as wanting to change the way tax is paid to councils, Labour says that it wants the Bank of England to “encourage a shift in bank lending away from real estate”, and once house prices are “stabilised”, to tighten maximum loan-to-income and LTV ratios in an effort to keep house prices down.
Labour’s proposals also target landlords, stating that it would end “the buy-to-let frenzy” by capping annual rent increases and making BTL mortgages “more firmly regulated and restricted”.
Outside of this, the opposition party says that it would form public development corporations that would have the power to purchase, develop and sell land in the public interest using money from regional development banks and that local authorities would set housing targets “based on the type, size and tenure that local people need and afford.”
This local focus continues into the idea for community land trusts and community-led housing, a right to buy model based on the Scottish version, and compulsory sales orders, which would allow public authorities to put unused or derelict land up for sale with a first refusal given to “community groups”.
North London estate agent Jeremy Leaf comments that the proposals are “no real surprise”, adding that, “although some people may be scared by the prospect, some of the ideas have merit, particularly regarding the need to modernise the current outdated council tax system. Ensuring that upper bands are added and regular revaluations take place, would make it fairer for all as current limits have not kept pace with inflation.”
“As for the other measures,” he continues, “not many people would take issue with stable prices and more affordable homes, but pulling that particular rabbit out of the hat has always proved difficult in the past.
“Killing market forces and the ability of the private sector to generate much-needed housing for all will remain important unless the public sector is going to take over the majority of housing provision.”