A proposal that the Government should look to raise more money from property taxes has met with furious opposition from the property and mortgage industry.
The idea has come in a policy document published by the Organisation for Economic Co-operation and Development.
It suggests that property taxes make more sense than trying to raise existing taxes on companies and individuals.
It also says that property taxes could limit future housing market bubbles.
While other countries do charge property taxes, usually a yearly levy on the value of a home, Britain does not – yet. However, Britons do pay Stamp Duty on the purchase, and next April, buyers of properties worth over £1m will be paying it at the new ‘mansion tax’ rate of 5%.
David Newnes, estate agency managing director at LSL, owners of Your Move and Reeds Rains, said another tax on residential property would not make the UK any safer from the cycle of boom and bust.
He said: “Property owners already pay through the nose for council tax and capital gains on property other than their principal home and Stamp Duty.
“Any additional levies will force an already slow market into a standstill. Far from protecting the UK from ‘boom and bust’, squeezing more tax from home ownership and residential property generally would weaken consumer demand, reduce home owner equity and force thousands more people into the already white-hot rental sector.
“The impact on the supply of rental property also cannot be ignored. Taxing landlords further on property ownership could remove thousands of rental properties from the market, and this already stretched sector would quickly see under-supply, increasing demand and pushing up rents even further.
“Those who own property are already paying more than their fair share of taxes.
“Any further tax hike in this sector would put home ownership out of reach of millions. Such measures could ultimately remove the boom, leaving us only with the bust.”
Paul Hunt, managing director of mortgage software provider Phoebus, said: “A recurrent tax on property sounds dangerously like a council tax, which is already at punishing levels.
“We already have a massive housing deficit and need an incentive not to build more property like a hole in the head. I think the Coalition would be daft to pursue this idea further.”
Nicholas Leeming, commercial director of property website Zoopla, said: “More property taxes in Britain would be enormously damaging, wildly unpopular and politically suicidal.
“Landlords would pass the tax on to their tenants in the form of higher rents. This would be the poll tax writ large, and yet again it’s working families who would bear the brunt.
“Squeezing hard-working families for even more tax until the pips squeak is not the solution.”
Comments
Hard working people pay through the nose. Former HMRC employees and advisers pay us all back for the great training and jobs which gave them their training at the public purse's expense by then working against the tax regime by devising schemes that beat the system, legitimately. It isn't much good introducing a 5% Mansion Tax as these are the people who can afford to pay to get around it!