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Tax reform could raise funds for up to 31,000 social homes a year, NEF says
Closing a tax loophole could raise enough money for 31,000 new social homes annually, according to research by the New Economics Foundation (NEF).
A new report by the thinktank, together with 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 NEF is urging government to treble the stamp duty surcharge to 9% for multiple homeowners and 6% for non-resident house buyers.
The researchers point out that average rents were up 6.1% in the year to September 2023, and for new lets the increase was 10%, including a rise of 12.1% in London.
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The report also states that the number of UK properties owned by overseas residents tripled from 60,366 in January 2010 to 181,701 by August 2021.
As of July 2022, non-UK residents owned £90.7bn of property in England and Wales, £45.3bn of which is in London – with higher interest rates and favourable currency rates providing an advantage to overseas cash buyers, it said.
NEF’s research also found that two-fifths of landlords have no borrowing.
Alex Diner, senior researcher in housing policy at the NEF, 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 that mean most landlords don’t pay National Insurance on their property income.”
Mr Diner also argued that a higher stamp duty on debt-free properties would “level the playing field for renters and first-time buyers, raise billions and help ease our chronic social housing shortage”.
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