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.
The policy idea is contained in a new report which in Labour aim 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”.
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.”
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”.