At the moment people in cheaper houses pay a higher proportion of Council Tax than people living in expensive ones. A family living in a £320,000 house has to pay only twice as much Council Tax as a family living in a house that costs £68,000 - despite their home being more than four times as valuable. Some 3.7 million households are worse off as a result.
Kathleen Kelly, programme manager for place at JRF, said: “As MPs gather for their party conferences and the new housing minister settles in, now is the time to fix the underlying problems in the housing market. It will take huge political courage to achieve this - but we cannot afford to leave people or our economy helplessly exposed to our volatile housing system.
“We need radical tax reform that would reduce volatility and offer a better deal to millions of households, while developing alternatives to ownership so people have access to stable tenancies in both the social and private rented sector.”
Mark Stephens, co-author of the report, added “political bravery” is needed to tackle issues like property taxation.
He said: “Overall, the steps taken by the Government fall far short of the fundamental overhaul we desperately need to create a stable housing market that has a greater social benefit than the four boom and bust cycles we have experienced since the 1970s.”
But John Hitchcox, chairman of Yoo, the global residential firm, believes JRF’s conclusion “just don’t add up”.
He said: “Just because someone lives in a pricier property it doesn’t mean they’re necessarily richer. Over time, some homes have spiralled up in price quicker than others.
“Many older people for example, have invested in their homes over the years and now live on minimal pensions. Making such people pay more council tax because their properties have shot up in value would create more problems than it would solve.”
And he added: “Today’s Royal Institute of Chartered Suryerors’ figures show house prices falling everywhere apart from London – so the need for manipulating prices via the tax system is reduced anyway, even if one did accept it was a good idea in the first place.
“It’s fair to say that council tax valuations, tied to 1991 numbers,are out of date. But let’s not pretend Vince Cable’s national property tax is any great fix, because it’s not.
“We need to be encouraging mobility in the market and this will onl be done by reducing stamp duty and cutting moving costs.”
