The Association of Intermediary Mortgage Lenders has warned the chancellor not to “revise” property tax ahead of next month’s Budget, a move that would “hinder economic growth”.
Rachel Reeves faces a fiscal gap of £20bn to £30bn this summer, with the Treasury introducing a series of new housing taxes ahead of the Budget on 26 November.
Landlords could also be hit by proposals to apply national insurance to rental income, a move the Treasury hopes will raise £2 billion.
Labor is also understood to be looking at plans for a new local annual property tax to replace council tax over an unspecified phased period.
But Imra estimated that the measures would collectively raise less than £6 billion and would damage a key part of the economy.
Kate Davies (pictured), executive director of IRA, said: “These figures do nothing to change the situation. The chancellor should resist the temptation to pursue politically simple but economically harmful options.”
“Most of the property-related measures being discussed will generate minimal revenue, take years to implement and undermine confidence in the property market.”
Labor has pledged not to raise income tax, VAT, employees’ national insurance contributions and corporation tax – which together account for three-quarters of public revenue.
But Davis believes the government should focus on large-scale reforms that can generate large amounts of revenue more quickly, even if that means making politically difficult choices.
She said: “Fixing the housing market will not meet the government’s needs.
“If ministers want growth, they should consider wider and bolder measures to really boost revenue and support investment. Small, piecemeal tax changes will only increase uncertainty, undermine confidence and slow economic activity at the wrong time.”
Davies added: “Boosting housing activity is one of the fastest and most effective ways of stimulating wider growth.
“Suppressing it would have the opposite effect. The inevitable result of further squeezing landlords and homeowners would be fewer rental units, higher rents and more pain for renters.”
She added: “Uncertainty has severely damaged business confidence.
“We may not like every decision the chancellor makes, but markets will respond much better to clarity and conviction than to hesitation and indecision.”
