The UK is in need of more homes, not taxes, to put the property market back on a firm footing, according to a new report. Research from the Policy Exchange claims it is urgent that policymakers prioritise increasing housing stock, creating 1.5 million new homes by 2020, including the formation of at least one new garden city. Doing so will ease some of the barriers to home ownership and facilitate real estate investment.
The study examined the problems currently facing those trying to get onto the property ladder, assessing the pros and cons of introducing new land and real estate taxes. It concluded that now is not the right time to overhaul the tax system, with the UK already paying some of the highest property levies in the developed world. The Policy Exchange claims council tax bills, stamp duty, inheritance tax and capital gains tax have created a situation where UK property taxes have risen more than twice the average level in the OECD.
However, altering taxation levels is not the answer either, according to the research. The study maintains that the best way of bringing down the cost of rents and homeownership is to deal with issues such as price volatility and wider instability that affects the planning system - a large portion of which is the result of a lack of housing stock.
The Policy Exchange is calling on policymakers to commit to building 300,000 new homes every year from 2015 to 2020. Garden cities should also act as "beacons for development, creating huge housing and infrastructure projects". Meanwhile, councils that fail to hit their own housing targets to release land to local people who want to design and build their own homes.
Alex Morton, head of housing and planning at Policy Exchange, said, "No other developed country taxes property more heavily than the UK. Yet rising house prices and falling levels of homeownership have led to many calling for an increase to land and property taxes. But these issues will only be solved by genuine reform of the outdated planning system, not a tax raid on peoples’ homes. Politicians cannot try to do everything at once and must focus on the most crucial issues."
Is it as simple as just building more houses? Find out in this report looking at 4 decades of construction and house price data
- Wednesday 13 November 2013