A Labour-commissioned report calls on the party to make radical change to the housing market if it wins power. The report proposes to replace the Council Tax with a “progressive property tax” that would see landlords forking the bill.
One of the authors of the report, George Monbiot, stated that since 1995 land values have increased by 412 per cent. He argues that it is not the cost of bricks and mortar that is on the rise, but the land it sits on, significantly affecting not only homeowners but also those wanting to buy farmland.
The tax would be set nationally rather than by local authorities and would be payable by the property owners, rather than tenants, and based on property values, which unlike Council tax bands, would be regularly updated.
The Land for the Many report says there would be a “progressively higher rate of taxation” for each of the top four property bands by value.
The proposed tax raid is one of many policies being taken into consideration by the Labour Party with the release of the independently commissioned report.
Further suggestions were made to introduce an automatic higher rate for long-term empty properties. Landlords may also be concerned by the proposal for Capital Gains Tax on second homes and investment properties to match or exceed the rates of income tax. Homeowners not resident to the UK would also be hit drastically should the report be implemented under a Labour Government.
Ministers branded the move “extraordinary and deeply damaging” and warned that Labour’s move amounted to a “tax bombshell”.
And the single person discount, used for widows, pensioners and more, would be scrapped – with the report accusing the discount of encouraging the “over-consumption of housing”.
The report urges major changes made to the property tax system in a bid to “discourage the use of homes as financial assets, reduce the tax paid by the majority of households, and encourage more efficient use of the housing stock”.
“We recommend that a Labour government replace the regressive and unpopular council tax with a progressive property tax based on contemporary property values,” it says.
“Unlike council tax, this tax would be payable by owners, not tenants.
“This would result in significant administrative savings, lower levels of arrears and less court action.
“Unlike council tax, the progressive property tax rate would be based on regularly updated property values, and the rates would be set nationally, rather than locally determined.”
Shadow Cabinet Office Minister Jon Trickett welcomed the report, vowing to study its recommendations “in detail” and said: “For too long, people across the country have had little or no say over the decisions that affect their communities and the places in which they live.
“So much of this can be traced back to the broken system of land ownership. Concentration of land in the hands of a few has led to unwanted developments, unaffordable house prices, financial crises and environmental degradation.
“Labour is committed to tackling these head on and delivering a fundamental shift in wealth and power from the few to the many.”
Housing Secretary, James Brokenshire warned: “Labour will stop at nothing to hammer families with more tax and make home ownership a pipedream for future generations.
“Plans to seize land into public ownership also show Labour’s true colours of more and more state control.
“This tax bombshell for families would mean family homes with gardens paying far more and higher taxes on pensioners by abolishing the single person discount.”