The Intermediary Mortgage Lenders Association (IMLA) has warned Chancellor Rachel Reeves against targeting the housing market for tax increases in next month’s Budget, cautioning that such measures would raise little revenue and risk stifling economic growth.
With the Treasury reportedly facing a fiscal shortfall of between £20bn and £40bn, IMLA’s analysis suggests that all of the property tax proposals currently under discussion – including an annual property levy, Council Tax reform, and extending Capital Gains Tax to main residences – would collectively generate less than £6bn.
Kate Davies (pictured), executive director of IMLA, said: “These numbers simply don’t move the dial. The Chancellor should resist the temptation to reach for politically easy but economically damaging options.
“Most of the property-related measures being discussed would deliver minimal revenue, take years to implement and undermine confidence in the housing market.”
Davies urged the Government to pursue more substantial economic reforms capable of driving growth and generating significant revenue rather than introducing short-term or symbolic property taxes.
She said: “Tinkering with the housing market will not deliver what the government needs.
“If ministers want growth, they should look at broader, bolder measures that can genuinely raise revenue and support investment.
“Small, piecemeal tax changes will just add uncertainty, hurt confidence and slow activity at exactly the wrong time.”
Housing transactions, she noted, remain a key driver of economic activity, supporting sectors including construction, conveyancing, surveying, home improvement, removals, and retail.
Davies added: “Boosting housing activity is one of the fastest and most effective ways to stimulate wider growth.
“Dampening it will have the opposite effect. The inevitable result of squeezing landlords and homeowners further will be fewer rental homes, higher rents and more misery for renters.”
IMLA has called for a coherent long-term housing strategy, encouraging the Government to work with private finance to increase housing supply and investment rather than implementing “short-term, politically motivated” tax policies.
Davies concluded: “Uncertainty is deeply damaging to business confidence.
“We may not like every decision the Chancellor takes, but the market will respond far better to clarity and conviction than to dithering and indecision.”
