Renters would stop paying council tax under radical plans being considered by the Labour Party.
A Labour-commissioned report calls on the party to intervene to cool the housing market if it wins power by introducing a new “progressive property tax” set nationally instead of by local councils and paid for by landlords instead.
As part of Labour’s proposed major property laws shake-up, empty homes, second homes and those owned by people not resident in the UK for tax purposes would have to pay the new tax at a “significantly” higher rate.
The idea behind the proposed shake-up of the property tax system is to “discourage the use of homes as financial assets, reduce the tax paid by the majority of households, and encourage more efficient use of the housing stock”.
The report states:”We recommend that a Labour government replace the regressive and unpopular council tax with a progressive property tax based on contemporary property values.
“Unlike council tax, this tax would be payable by owners, not tenants.
“This would result in significant administrative savings, lower levels of arrears and less court action.
“Unlike council tax, the progressive property tax rate would be based on regularly updated property values, and the rates would be set nationally, rather than locally determined.”
Some ministers have branded the proposal “extraordinary and deeply damaging” and warned that Labour’s move amounted to a “tax bombshell”.
The policy idea, contained in the report, suggests that if Labour wins the next general election, the party should make public all information about land ownership and control, urge the Bank of England to do more to cool the property market, and give new ‘Public Development Corporations’ the power to purchase, develop and sell land “in the public interest”.
The report was welcomed by shadow cabinet office minister Jon Trickett, who vowed to study its recommendations "in detail".
However, housing secretary James Brokenshire said the plans were “extraordinary and deeply damaging in equal measure”.
He said: “Labour will stop at nothing to hammer families with more tax and make home ownership a pipedream for future generations.
“Plans to seize land into public ownership also show Labour's true colours of more and more state control.
“This tax bombshell for families would mean family homes with gardens paying far more and higher taxes on pensioners by abolishing the single person discount.”
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