Give tax breaks to renters to help them buy

The Social Market Foundation 'think tank' has suggested that the government should consider tax breaks for private renters to help them save a deposit faster for buying a property.

The  foundation suggested that a more imaginative use of taxation could help alter the housing market as well as raising revenue for the Exchequer, allowing it to do other things.

An example of the kind of tax break that they are suggesting is council tax rebates to private sector renters to help them save for a deposit, thus improving their chances of getting on the housing ladder.

The Social Market Foundation has looked at housing policy across a number of countries and found that the UK has the lowest rate of home ownership, and saving for a deposit is the greatest barrier to getting on the property ladder. The UK also has the highest housing costs, accounting for over a quarter of disposable income. They also said that there are an estimated 1.5m vacant dwellings in the UK at present. Taxing these empty properties as little as 1% of their value could provide billions in revenue for the Treasury.

Recommendations set out in the report to increase access to homeownership include:

• Provide council tax rebates to private sector renters to help them save for deposits
• Offer insurance for high loan-to-value mortgages.
• Require banks to give mortgage applicants information on longer term fixed rate mortgages up to 30 years.
• Reform council tax to make it more progressive, and base it on property values, re-evaluated every three years.
• Abolish stamp duty to allow homeowners to downsize and make up the revenue by decreasing capital gains tax exemptions for secondary properties.

A spokesperson for the Social Market Foundation said: “One and a half million homes are left vacant in the UK, while two hundred thousand are owned by individuals who are not residents in the country. At a time when the country is desperate for homes and the government desperate for money, we should be using these as sources of revenue, rather than letting them sit idle. The billions in revenue these taxes could generate should be used to help those losing out in the housing market.”