The Chancellor announced in the Autumn Statement that ‘we won’t introduce a new tax on homes’. But as housing professionals know the Coalition will introduce a new property tax in April when the ‘bedroom tax’ comes into effect in the social housing sector. This ‘tax’ will see non pensioner households under occupying by one bedroom losing 14% of their benefit while those under occupying by two bedrooms will lose 25%.
By taking this route the Government inadvertently brings property taxation full square into the public arena. In the interests of fairness perhaps a tax on under occupying owner occupiers should be introduced. However such a proposition would be a logistical nightmare but a land value or property tax could work just as well. Those with the most valuable and generally bigger properties would be taxed the most. Depending on how it is designed, the tax could raise badly needed tax revenue and move us away from our dependence on income and consumption taxes. We could also reduce or indeed scrap Stamp Duty on house purchases – it is after all simply a tax on mobility.
More generally we would see a more efficient use of our housing stock as some households down size or move areas to lessen their tax bill. We would also see more use being made of the 25 million spare bedrooms we have in this country. Maybe we wouldn’t need to build 250,000 new homes a year after all.
Discounting changes in payments for local services through Council Tax, we last attempted a property related tax in the 1970s with the Development Land Tax. It isn’t about time we had another go?
Independent Housing Consultant