Tuesday, 28 March 2017

‘Radical tax reform’ needed to fix housing market

People living in more expensive homes should pay more council tax to drive down house prices, according to a new report from the Joseph Rowntree Foundation.

The charity estimates 3.7 million people are worse off as a result of the current system.

In a progress update to its 2011 Tackling housing market volatility report, JRF also claims the government is still not doing enough to stabilise the market.

The charity calls on government to change the council tax system in a move towards a ‘national property tax’ that would ‘play a key role in stabilising the market and ending boom and bust cycles’.

Under the current system, a family living in a £320,000 house pays only twice as much council tax as one living in a £68,000 property.

The report also calls for more investment in policies to increase the supply of housing.

According to JRF, even if every government housing policy was successful in meeting its target, there would still be 310,000 fewer homes than required in the UK by 2015.

Kathleen Kelly, programme manager for place at JRF, said: ‘Attempts to build thousands more homes are welcome and badly needed to overcome the high prices that lock so many out of ownership.

‘But they won’t come quick enough for those who are struggling today. We need radical tax reform that would reduce volatility and offer a better deal to millions of households, while developing alternatives to ownership so people have access to stable tenancies in both the social and private rented sector.’

The report calls for reform of the private rented sector to give renters more stability and says there must be an increase in the availability of social rented and intermediate rent homes, as well as shared ownership properties.

Mark Stephens, the report’s co-author, said: ‘Overall, the steps taken by the government fall far short of the fundamental overhaul we desperately need to create a stable housing market.

‘Tackling issues such as property taxation require political bravery and there is an important longer-term prize at stake: a more stable system that has a greater social benefit than the four boom and bust cycles we have experienced since the 1970s. But in some ways this progress report shows we are moving further away from a stable housing market.’

Read more about the JRF report in Jules Birch’s latest blog

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