Former MP calls for thorough review of property taxes
Chancellor Rachel Reeves has been cautioned against making incremental changes to property taxation in the forthcoming Budget, as an independent committee—led by former Liberal Democrats leader Vince Cable—has warned that isolated reforms could worsen dysfunction in the housing market.
The statement from the Independent Housing Policy and Delivery Oversight Committee comes amid speculation about possible tax changes and calls for a comprehensive review of the property tax system.
Cable (pictured top), chair of the oversight committee, emphasised the need for a thorough review of property taxes. “There is no doubt that the housing market is not working efficiently and property taxation is a significant factor,” he said. “The case for major reform of the whole property tax system – from Stamp Duty Land Tax to inheritance tax to council tax and VAT – is almost unarguable.”
According to Cable, piecemeal changes in the Budget for revenue raising purposes would be “a step in the wrong direction.”
“To take just one example, putting National Insurance tax on landlords would be most likely to lead to higher rents for tenants,” he said. “That is, in effect, an increase in taxation on working people.
Reeves is expected to announce substantial tax rises in the upcoming Budget, with elevated government borrowing costs having limited her fiscal options since the spring statement. Among the measures under consideration are sweeping changes to property taxation.
Proposals include replacing stamp duty with a national proportional property tax on homes valued above £500,000, overhauling or substituting council tax, and removing capital gains tax relief for high-value main residences. While these reforms are intended to boost government revenue, they could lead to higher annual expenses for owners of expensive properties and landlords, though some buyers may benefit from lower upfront costs.
“The reality is that wholesale reform is needed to make the market work more efficiently and achieve improvements in housing provision across the country,” said Cable, a former member of parliament for Twickenham. “This is no small task, and we do not underestimate its complexity or the political dimension.
“Change on the scale necessary demands the most careful consideration and at the least, a white paper and extensive consultation to avoid unintended consequences to this fundamental aspect of society.”
Cable pointed out that a properly functioning housing market can bring great benefits – improvements to the economy, greater labour mobility, supporting skills development and providing more and better-quality housing – to name a few.
“As an independent committee, our aim is to bring a non-partisan, well-informed, critical – but constructive – eye on developments in this vital part of the fabric of the country,” he said. “It is in all our interests that everyone has safe, well-designed and built accommodation. We are not there at the moment, and we are committed to doing all we can to help the government achieve those aims.”
At its first meeting in September, the committee outlined several priorities for further investigation. These included the ongoing challenge of affordability, the expected impact of the Renters’ Rights Bill, and the difficulties renters face in saving for a mortgage deposit. The group also discussed whether recent planning reforms are having the intended effect, the suitability of housing for older people, and regional differences in the supply of affordable homes.
Other issues under review are the quality of existing housing stock, rising construction costs, and the shrinking number of building firms, particularly small and medium-sized enterprises facing financial pressures. The committee also highlighted the need for greater coordination between government departments, the effects of local government restructuring, and the implications of population forecasts and regional disparities.
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