Finance and Taxation Reform

Landlords would pay tenants’ council tax under new Labour plan

Sally Walmsley
Written by Sally Walmsley

Renters would no longer have to pay council tax under plans being considered by the Labour Party.

The charge would be replaced with a new “progressive property tax” set nationally instead of by local councils and paid for by landlords instead of tenants.

Owners of second homes, empty 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.

Radical

The policy idea is contained in a new report which calls on Labour to make a string of “radical but practical changes in the way land in the UK is used and governed” if it wins the next election.

This includes a recommendation to ‘end the buy-to-let frenzy’.

It says a Labour government should make public all information about land ownership and control, urges the Bank of England to do more to cool the housing market, and says new ‘Public Development Corporations’ should have the power to buy, develop and sell land “in the public interest”.

Major shake-up

The report urges a major shake-up of the property tax system in a bid 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”.

It goes on to say: “We recommend major reforms of the private rented sector. 

“For example, tenancies should be open-ended, and landlords should lose their power to evict a tenant who has not broken the terms of the tenancy agreement for the first three years of the tenancy agreement and should have to provide grounds for eviction after that point. 

“There should be a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower). We propose that buy-to-let mortgages should be more firmly regulated and restricted.”

The report was welcomed by Shadow Cabinet Office Minister Jon Trickett, who vowed to study its recommendations “in detail”.

He said: “For too long, people across the country have had little or no say over the decisions that affect their communities and the places in which they live.”

“So much of this can be traced back to the broken system of land ownership. Concentration of land in the hands of a few has led to unwanted developments, unaffordable house prices, financial crises and environmental degradation.

“Labour is committed to tackling these head on and delivering a fundamental shift in wealth and power from the few to the many.”

Devastating

The RLA believes the plans could have a devastating impact on tenants and landlords alike, as more and more people look to the private rented sector for a home.

RLA policy director David Smith said: “This plan would be hugely damaging for tenants and landlords alike.

“The truth is the vast majority of landlords have a single property and are saving for a pension.

“It is not reasonable to expect them to pay council tax for services that benefit their tenants.

“Our evidence shows increasing numbers of landlords are already selling up as a result of recent tax and legislative changes – the latest of which is the abolition of Section 21 repossession powers.

“However, forcing landlords out of the sector does not create more homes.

“Latest figures show a quarter of the population is expected to have a home in the private rented sector by 2021.

“What Labour needs to ask itself, should the party come to power, is where these people are going to live?”

Housing Secretary James Brokenshire described the plans as “extraordinary and deeply damaging in equal measure”.

To read the full report click here.

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and award-winning Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

20 Comments

  • They haven’t got a clue I work hard and saved for the deposits for two houses to use as a pension when I retire I’ve never raised the rents in 6 years but with the new tax policies I’ve had to raise the rents and explain to my tenants in the next 3 years your rents will increase to meet my tax bill which has more than doubled but it could be time for me to sell up and put two families on the streets great work by a clueless government

    • The inevitable consequence of a further onslaught on Landlords , will be the massive selling off of BTL houses, collapsing house prices, and putting many genuine home owners into NEGATIVE EQUITY, as well as destroying many small landlords pensions. And Rents will have to rise to cover landlords additional
      costs . Everybody would be effected , so hardly a great vote winner ???

      • Collapsing house prices would help first time buyers to get on the property ladder. It has become increasingly difficult for people to buy a home as they have been competing with BTL investors and foreign investors who have invested in the UK property market, many for speculative purposes. The result of so many investors chasing properties has of course been the massive increase of property prices in a relatively short space of time. That may all change with a change of policy as we are already witnessing such as the removal of subsidies to BTL (tax relief evaporating), and more coming our way by the looks of it.

  • This war on landlords – that began with the Conservatives justifying increases in stamp duty and removal of tax relief in the name of “fairness” – is now going to escalate under Labour to a frightening extent. The mainstream parties have made it clear: renters are more numerous than landlords and hence they are going for their votes and taking that of landlords for granted.

    So I have only one question to respectfully ask the RLA and associations like it and it’s this: at what point do we stop hand-wringing, and reporting the latest defeat, and instead, start mobilizing politically? At what point do we start turning landlords into a political voting bloc to be reckoned with, rather than pointlessly lobbying civil servants and Government who don’t care and never listen?

    Because if the answer is “we don’t”, then all landlords can look forward to is more of the same. And in that case, then it will be time for small landlords like me to sell up. And that will mean, sadly, small landlords like me leaving associations like the RLA in huge numbers. (A shame really, because the RLA does provide a lot of useful advice and help. But at the of the day: no property, will mean no need for landlord associations).

    So: what is the RLA going to do?

    • The RLA has recently brought together landlords and letting agents’ groups at a summit in London to form the Fair Possessions Coalition, to address government plans to abolish Section 21. This was organised by the RLA to show that industry bodies are united in their views, and strengthen the message to government that Section 21 MUST stay until a fair and sensible alternative is introduced to take its place.
      You can read more about this here:https://news.rla.org.uk/rlas-landlord-coalition-says-confidence-is-key/

  • It’s all part of their Marxist ideology to destroy the private rented sector landlords. The thought of these extremist headbangers getting their hands on power should be terrifying to anyone in business. Then again the Tories have been the most damaging Government in recent history for our industry.

  • Faced with this substantial hike in a Landlord’s expenses, landlords will be forced to raise the rent to compensate, just as they have been by the agents fees ban. So the tenant will end up ‘paying’ the council tax anyway, just as they will end up contributing to the cost of agent’s fees. What next? Landlords being forced to pay a tenant’s rents for them? You may laugh…or weep…but

  • I agree they should build more social housing and would be happy to give tenants 3-4 months notice if they gave me the same amount instead of disappearing when it suits them without paying the last month’s rent and leaving me with a refurbish bill which is rarely covered by a deposit.
    Many landlords now retired, including myself make a very modest profit less than £10,000 most years. I would loose a third of my income if I had to pay my tenants council taxes. They state they don’t want mass sales but if they force us into poverty by rent caps what other options will we have? The increase in capital gains tax would destroy any gains and leave most of us depend on the benefits within a couple of years. I would be prepared to pay taxes based on rental income but it would cripple most of us to pay this land value tax.
    Is there any way the RLA can help us explain this to Labour????

    • We share your concerns as outlined in the article. At present this is not Labour policy, but a recommendation in a report commissioned by the party to be ‘considered’. We will, however be monitoring the situation closely and responding accordingly should things change.

      • considering how the government usually considers things when it comes to landlords and hostile legislation towards them. we can take this as a given. when they consider things, it is just to say we will consider it from our perspective and what will bring in more revenue for us and not how it will impact the market and individuals involved. to emphasise my point, how many licensing have actually not gone ahead after being “considered” by local councils and also how much legislation has not gone ahead from the government such as stamp duty reforms, increased tax liability reforms, abolition of tenants fees reforms, s14 removal etc etc.

        given how much has changed in the past 2 years and how anything to be considered, isnt actually considered, we can take it as gospel that this will happen

        but thats fine. i have put 4 of my properties on the market as of last week and the remaining 6 will be on the market over the next few months. the government can deal with the storm that they have created whilst im sunning myself in some far off country in blissful ignorance!

  • OMG Here we go again, only a labour admin could come up with an idea like this, anyone trying to make a crust will be plundered by any means, they are such an out and out communist ideologue that contrives to ensure no one but the state has anything at all. They will want us landlords to pay the tenants’ rent next and maybe their tv licenses.
    A labour government will be the end of the end. Last one out turn off the lights

  • I am a firm labour supporter and I am equally a landlord and I will not back this move. I would not even give thought to this. Empty houses left vacant for a long period is another story but higher tax for second homes and landlord paying council tax for tenants is a no no. Rent will be gradually go higher and people will market out of renting and landlords will be see no reason to continue. This is not something we should support and w me should commence sending out sentiments. To the opposition.

  • I cannot believe that Labour would be so stupid to implement this new legislation. I think it would be the final nail in the coffin for many private landlords. I for one would probably sell, which obviously means one rental less. I saved very hard like most landlords. This is my pension pot and hopefully will top up my pathetic NHS state pension. When I was younger I put a small amount into a private pension but with a mortgage, trains fares, council tax there was just not enough. If this does go ahead, I would imagine most of us would hike up rent in order to recoup the costs.
    Very short-sighted.
    Over to you Mr Corbyn

  • Now commission a report from someone who’s actual job it is to know the rental market.

    This proposal is simply ludicrous and anyone with any knowledge of this sector will tell you the same.

  • Crazy! I am already looking to not buy any more property in this country but rather buy elsewhere rather than what appears to be a dying economy.

  • Collapsing house prices would help first time buyers to get on the property ladder. It has become increasingly difficult for people to buy a home as they have been competing with BTL investors and foreign investors who have invested in the UK property market, many for speculative purposes. The result of so many investors chasing properties has of course been the massive increase of property prices in a relatively short space of time. That may all change with a change of policy as we are already witnessing such as the removal of subsidies to BTL (tax relief evaporating), and more coming our way by the looks of it. Seemingly the new objective is to view property as a place to live instead of a investment or pension.

    • Were first time buyers buying when property prices collapsed in 2008/2009 – No! The government (Labour) were desperate to prop up the housing market and it was landlords like myself taking up the offer of No stamp duty that allowed people who needed to sell for the usual reasons to do so.

      I have properties in two locations. One is highly desirable (York) and the same size and type of house costs three times that of the ‘unfavorable’ location (they are only 20 miles apart!) It seems everyone in York blames BTL investors for the high prices that make it very difficult for first time buyers. But….how do you account for the fact that there is a higher concentration of BTL houses in the cheap area?

      I don’t have the answers but neither do the many with selective memories and pet theories that don’t stand up to robust scrutiny.

    • you are very much mistaken. a lot of people renting houses cannot afford the price of a house no matter what the price. they simply dont have any money for a deposit and live month to month from pay cheque to pay cheque. take away the rental accommodation from these people and they will be on the streets

    • Quote ‘difficult for people to buy a home as they have been competing with BTL investors’

      Mmm… You certainly have these particular facts incredibly incorrect! To say the least!

      As figures prove that it’s less than 1% of buy to let that effect first time buyers.

      History now shows, what has been so much worse, nothing but detrimental for 1st time buyers, any home buyers alike, is the sharp house price increases during the period 1997 to 2007.

      This itself has caused the most damage, even the 2008 crash didn’t help, price increases many more times the yearly inflation.

      I find it peculiar how certain people of persuasion always choose to ignore these fact!

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