Private tenants would no longer have to pay Council Tax under new plans being put to the Labour Party.
A Labour-commissioned report, Land for the Many, calls on the Party to intervene to cool the housing market if it wins power, by introducing a new “progressive property tax” set nationally, rather than by local councils, and paid for by landlords.
As part of Labour’s proposed new property laws, empty housing, second homes and those owned by people not resident in the UK for tax purposes would have to pay the next tax at a “significantly” higher rate. Also paying proportionately higher rates would be family households with bigger gardens.
The idea behind the proposed shake-up of the property tax system is 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”.
The report states: “We recommend that a Labour government replace the regressive and unpopular Council Tax with a progressive property tax based on contemporary property values.
“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.”
While landlords might want to pass this tax bill onto their tenants in the form of higher rent prices, it seems unlikely that they’ll be able to do so, as, among the new policies included in the report, rent controls are being considered.
Some ministers have branded the proposal “extraordinary and deeply damaging”, warning that Labour’s move amounts to a “tax bombshell”.
The policy idea, contained in the report, suggests that, if Labour wins the next general election, the Party should make public all information about land ownership and control, urge the Bank of England to do more to cool the property market, and give public development corporations the power to purchase, develop and sell land “in the public interest”.
As well as shaking up the property tax system, Labour is also urged to “end the buy-to-let frenzy”.
The Shadow Cabinet Office Minister, Jon Trickett, welcomed the report, vowing to study its recommendations “in detail”.
However, the Housing Secretary, James Brokenshire, said that the plans were “extraordinary and deeply damaging in equal measure”.
He explained his stance: “Labour will stop at nothing to hammer families with more tax and make homeownership 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.”