In a recent article, The New Statesman advocates for a bold housing policy in Rachel Reeves’ upcoming Budget, urging the government to introduce a proportional property tax of 0.48% on the updated value of homes. This would replace council tax and stamp duty, aiming to stabilize house prices by discouraging excessive price growth through an annual tax.

The article is critical of landlords, framing them as “the already wealthy,” and highlights a historical policy imbalance. It notes that while Gordon Brown’s government removed tax relief on mortgage interest for homeowners, landlords retained this benefit, fostering a lucrative rental sector largely shielded by favorable tax policies. This, the article suggests, led to an industry benefiting from tax avoidance and wealth transfers from renters to landlords.

The current trend of landlords selling off properties is seen as a positive shift by the article, as it increases housing supply and potentially enables renters to transition into homeownership, helping to balance the market.

While acknowledging that a proportional property tax would face resistance, particularly from buy-to-let investors who rely on property for retirement savings, the article argues that such reforms are necessary for long-term housing market stability. The potential losses for some, it concludes, do not outweigh the overall benefits of reducing inequality and addressing housing affordability.

You can read the whole article here.