Should property hoarders who are cashing in on the UK housing market be taxed more?

Landlords and overseas property investors who are hoarding property and cashing in on the UK's broken property market should face a higher premium stamp duty tax, a think tank has urged.

Related topics:  Landlords,  Overseas,  Property,  tax
Property | Reporter
23rd November 2023
Question 901
"We should tax property speculators more to curb their buying power and use the money to build more social homes. It's also time we closed the tax loopholes that mean most landlords don't pay national insurance on their property income"
- Alex Diner - New Economics Foundation

A report by the New Economics Foundation and the Homes for Us Coalition estimates that up to £5.7bn a year could be raised through higher stamp duty and by closing the national insurance tax loopholes open to wealthy UK property hoarders.

The move could fund the construction of an additional 31,000 social homes a year.

It comes after the latest figures showed that the government had significantly underestimated the scale of overseas investors buying up UK property. It is now more than double what was previously thought.

Trebling the stamp duty surcharge to 9% for multiple homeowners and 6% for non-resident house buyers, as well as closing the loophole on national insurance, could raise up to £5.7bn and fund the construction of 31,000 new social homes annually.

Average rents were up 6.1% in the year to September 2023. For new lets the increase was 10% in the year to Q3 2023, including a rise of 12.1% in London.

Alex Diner, Senior Researcher, Housing Policy at the New Economics Foundation, said: "Some buy-to-let landlords have been hit as interest rates have risen, but equity-rich speculators have been cashing in and hoarding property within our broken housing system.

"The rental market is broken, with too many families forced to pay extortionate rents. Higher interest rates have not led to a mass exodus of landlords from the market. But the fact that some now wish to sell is a huge opportunity for social landlords and first-time buyers to take these homes off their hands.

"But this is being squandered. If you're a first-time buyer hit by mortgage hikes, you probably feel stung right now by cash buyer landlords who can swoop in and undercut on price.

"We should tax property speculators more to curb their buying power and use the money to build more social homes. It's also time we closed the tax loopholes which means most landlords don't pay national insurance on their property income.

"Ordinary families are struggling to pay rent during this cost-of-living crisis. Higher stamp duty on debt-free property speculators would level the playing field for renters and first-time buyers, raise billions and help ease our chronic social housing shortage."

Ben Leonard, a renter in London and Organiser at ACORN, said: “Renting is a nightmare in England. Tenants like me have no protection as we are basically at the mercy of property-hoarding landlords who can buy up the properties they want, charge what they want and make a profit as they see fit.

"What's really outrageous is the number of properties that are just snapped up and then left vacant. It's a travesty to see so many empty homes when there are so many people in inadequate housing, or with no home at all.

"This government needs to get serious about building decent quality social homes. If a higher stamp duty could be used to fund the construction of new, high-quality social homes, then I'd love to see it happen. We can't go on like this."

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