Property News > Labour propose new taxes for tenants and homeowners

Labour propose new taxes for tenants and homeowners

Under new plans outlined by the Labour Party, homeowners with gardens would be hit with further taxes while tenants would be tax exempt. 

Among a series of reforms of the housing, planning and land sale market, a document commissioned from academics and economists suggests that a progressive levy would replace council tax, and this would be based on the value of the property. 

Branded ‘Land for the Many’, the report also advocates abolishing council tax discounts for single tenants, instead opting to tax non-UK residents on the land they own in the UK, whilst also designating large amounts of public land for the mass production of council houses. 

To make sure that the tax system remains fair and just, yearly property valuations would be carried out, while higher rates would be imposed on second and empty homes. 

Additionally, the report recommends more reforms in the private rented sector. One of the more significant proposals is to strip landlords of their power to evict tenants unless the terms of their tenancy agreement have been broken within the first three years. Landlords would also have to provide grounds for eviction should they wish to evict their tenant after that point. 

It also recommends capping annual permissible rent increases to ensure that they remain in line with or below the rate of consumer price inflation or wage inflation, whichever is lower. Meanwhile, tighter restrictions and regulations would be introduced on buy to let mortgages and local councils would be empowered to acquire land at cheaper prices than they are currently able to. 

Indeed, local authorities would have the right to insist that land that has been disused for a defined period be made available for sale at public auctions. Following that, existing laws would be amended to ensure that bidders could purchase the land for prices that closer resemble its current market value, as opposed to its potential value once it has been developed. 

To provide lower income families with a greater say in the process, the report proposes that everyone would be eligible to attend meetings, and residents would find it easier to make group purchases of land through a ‘community right to buy’ scheme. Firms based abroad who own land in the UK would face a new offshore company property tax.

Jon Trickett, Labour’s spokesman for the Cabinet Office, has confirmed that the party will indeed be considering the recommendations made in the report. ‘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. Concentration of land in the hands of a few has led to unwanted developments, unaffordable house prices, financial crises and environmental degradation,’ he added.

However, Housing Secretary James Brokenshire has expressed concerns, describing the report as extraordinary and deeply damaging. ‘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,’ he pointed out.

According to Joe Beswick, head of housing and land at the New Economics Foundation, a fresh debate on the ownership of land in the UK should be welcomed. ‘It’s great to see politicians starting to take the issue of land seriously. NEF have long made the argument that land is essential to properly understanding our current broken economy, but is largely ignored or side lined by mainstream economists,’ he said.

‘Land and land ownership is one of the drivers of so many of the crises that we face today, the housing crisis, the inequality crisis, and the climate emergency, and developing a fairer system for distributing and using land must be central to a new, sustainable economy,’ he added.

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