Lenders group warns new property taxes risk stalling economic growth
The Intermediary Mortgage Lenders Association (IMLA) has cautioned Chancellor Rachel Reeves not to target the housing sector for tax increases in the upcoming Budget, arguing that such measures would have limited fiscal impact and could impede economic recovery.
According to recent analysis by IMLA, the property tax proposals currently under consideration—including an annual property levy, changes to council tax, and capital gains tax on primary residences—would collectively generate less than £6 billion, despite the Treasury facing a fiscal shortfall estimated at £20 to £40 billion.
“These numbers simply don’t move the dial,” said Kate Davies, executive director of IMLA. “The Chancellor should resist the temptation to reach for politically easy but economically damaging options.
“Most of the property-related measures being discussed would deliver minimal revenue, take years to implement and undermine confidence in the housing market.”
Davies (pictured right) suggested that the government should prioritise substantial reforms capable of delivering significant revenue in a shorter timeframe, even if such decisions prove politically challenging.
“Tinkering with the housing market will not deliver what the government needs,” she added. “If ministers want growth, they should look at broader, bolder measures that can genuinely raise revenue and support investment. Small, piecemeal tax changes will just add uncertainty, hurt confidence and slow activity at exactly the wrong time.”
The industry body representing mortgage lenders highlighted the role of housing transactions in supporting employment across construction, conveyancing, surveying, removals, home improvement, and retail. A reduction in property sales, IMLA noted, would have repercussions across these sectors.
“Boosting housing activity is one of the fastest and most effective ways to stimulate wider growth,” Davies said. “Dampening it will have the opposite effect. The inevitable result of squeezing landlords and homeowners further will be fewer rental homes, higher rents and more misery for renters.”
IMLA is calling on the government to establish a comprehensive housing policy that leverages private investment for new development and long-term funding, rather than introducing short-term, politically driven tax changes.
“Uncertainty is deeply damaging to business confidence,” Davies said. “We may not like every decision the Chancellor takes, but the market will respond far better to clarity and conviction than to dithering and indecision.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
