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Council Tax Rebates for renters - think tank’s suggestion

A think tank is urging the UK government to consider tax perks for private renters to help them save faster for a property to buy.

The Social Market Foundation - founded by a Conservative peer and led by a former Daily Telegraph executive - suggests that a more imaginative use of taxation could alter the housing market. 

It suggests that this broad approach could also raise revenue for the Exchequer, allowing it to do other things - “for example, council tax rebates to private sector renters to help them save for a deposit, thus improving their chances of getting on the housing ladder.”


The SMF’s study looked at housing policy across English-speaking countries including Ireland, Canada, Australia and New Zealand and the UK. 

The SMF found that the UK has the lowest rate of homeownership in that group, and saving for a deposit is the greatest barrier to getting on the property ladder. Britons also have the highest housing costs, accounting for over a quarter of disposable income, the SMF found.

At present, the UK government applies a 2% surcharge on home purchases in England and Northern Ireland by individuals that do not have citizenship or residency. 

The SMF says this is modest, compared to Australia, where combined excise taxes on non-residents approach 15% in some states, or Canada, where they can reach 25%. 

The Labour party had said in spring last year that it was considering a higher surcharge on foreign buyers and the SMF says that a far higher tax - as much as 25% -  could raise £855m each year.

The think tank also says there are an estimated 1.5m vacant dwellings in the UK at present. Depending on design of the levy, taxing these properties as little as 1% of their value could provide billions in revenue for the Treasury. Both Australia and Canada tax their respective vacant homes as much as 3% depending on their location.

Australia and Canada also fully tax gains made from the sale of a property if it is sold within a year of the purchase, essentially denying sellers the benefit of capital gains tax exemptions. This tax is meant to discourage ‘house flipping’, and if the UK implements it, it would apply to 2.3% of home sales. At current levels, a 50% tax on the profits from house flipping in the UK would raise £550 million per year.

Recommendations from the report to increase access to homeownership include:

- Provide council tax rebates to private sector renters to help them save for deposits;

- Offer insurance for high loan-to-value mortgages. In Canada, insurance products are applied to mortgages where the deposit is under 20%, which the SMF argues encourages banks to lend to more low deposit customers and has contributed to a more stable and equitable Canadian market;

- Require banks to give mortgage applicants information on 10, 15, or 30 year fixed rate deals – longer term fixed rate mortgages are commonplace elsewhere, but not in the UK, and seem to have produced more stable and accessible markets;

- Reform council tax to make it more progressive, and base it on property values, re-evaluated every three years. Richer households currently pay proportionately less in council tax, and in England and Scotland the rate is based on a property’s value in 1991. No other country in the Anglosphere relies on valuations from more than six years ago;

- Abolish stamp duty to allow homeowners to downsize and make up the revenue by decreasing capital gains tax exemptions for secondary properties. Though lucrative, stamp duty is paid by the wrong party in housing transactions and prevents efficient movement in the property market.

A spokesperson for the SMF says: “One and a half million homes are left vacant in the UK, while two hundred thousand are owned by individuals who are not residents in the country. At a time when the country is desperate for homes and the government desperate for money, we should be using these as sources of revenue, rather than letting them sit idle. The billions in revenue these taxes could generate should be used to help those losing out in the housing market.”

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  • icon

    So this is just another way of punishing landlords who don't have the confidence to let their properties because of the Renters Reform legislation. It doesn't take much intelligence to see that the answer is to create fairer legislation in relation to letting.

  • icon

    I don’t believe there’s the shortage of property that they would have us believe.
    Probably a glut next year when the hundreds of thousands high rise unsuitable Flats now nearing completion hits the market. We’ll have loads more that’s not required from the new panic introduction of Developers Permitted Rights Planning Rules by Mr Michael Gove for Conversion of vacant Shops, Banks, Commercial Property all motoring in to Residential, what then when the glut hits the buffers nothing more to attract or milk.

  • Richard LeFrak

    What a crock of Sh1t, so if you wanted to flip a house you do all the work and take all the risk and the following take a slice:
    Tax Man
    Benefit Scroungers
    Civil Service
    New Arrivals on Inflatable Buses
    All on Gold Plated Pensions and those not on pensions get pension credits

    How about I put my money somewhere else....

  • icon

    Firstly not everyone wants to own a house. Maybe they do at some point in their lives but not right now.
    All these think tanks and activists need to acknowledge most people reside in the PRS for some part of their life from choice or circumstance. While they're at university, when they first leave home, while they're waiting to meet their life partner, when they're trying out a new relationship, when they want to be able to accept job offers in a geographically wide area, when they get divorced, etc. it's perfectly normal behaviour for the vast majority of people for a period of time.

    If they want to aid people's ability to save a deposit abolish Section 24 and most of the rental specific regulations. Why should rental properties be treated differently to owner occupied properties? There's nothing stopping owner occupiers putting 2 sets of bunk beds in a room but in the PRS it's overcrowding.

    Prospective FTBs already have access to huge amounts of tax payer funded assistance such as LISAs and previously HTB. Giving Council Tax discounts would be wide open to fraud and over complicated administration.

    If the government really wanted to encourage banks to lend to a wider range of buyers they would reinstate a form of housing benefit for homeowners. Just to go towards the interest element of the mortgage. It would lower the risk for the banks and cost peanuts. Borrowers would still need to meet lending criteria in the first place but it would give far greater certainty to the lenders, which should translate as lower borrowing costs for all mortgaged home owners.

    Why should people who live in expensive houses pay higher Council Tax? They are already paying far higher mortgage payments and don't receive any extra services from the Council. In a great many cases their disposable income will be lower than someone on UC.


    Great post. 100% agree.

  • icon

    😂 😂 😂 😂.... Just when you think you've heard it all.... Another hairbrained scheme comes along.. What if they don't save their council tax deductions for a deposit on a property? What if instead they use it for a new car or drugs and alcohol or a cruise? 😂 😂. This country is a laughing stock!


    Shane exactly what will happen, they won't use those savings for a home, we all know that

    Richard LeFrak

    Can imagine all the estates up and down the country running round saying summers coming and there's a Brucie Bonus coming.

    The Tinny Clubs in the back gardens will be legendary all smashed and eating Richmonds sausages off a BBQ made out of half cut metal bin...!

  • icon

    I didn't realise that Local Authorities had so much surplus cash they were in a position to discount Council Tax.
    Our Inept Councils North of the Border are just that.


    They want to take tens of thousands of pounds off each landlord with an empty property.

  • icon

    This Think Tank ain’t thinking !! Or livin in the real world. Think about That! ****s.


    I thought that the ideas were malicious, too.

  • icon

    Shane is right. Not all tenants are responsible people. They would just fritter away the cash if not paying the council tax. Ludicrous idea. They use the services, they should pay the CT.


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