Advertisement
Housing

Housing crisis: UK could raise billion taxing vacant homes and foreign buyers, think tank says

‘Housing sin taxes’ – levied on vacant homes, ‘house flipping’ and foreign buyers – could be a useful source of revenue, a think tank argues.

The UK government should make buyers pay for “housing sins” like leaving houses empty or ‘flipping‘ homes, a think tank has urged.

Britain is in the grips of a housing crisis, with more than 300,000 families stuck in temporary accommodation – while nearly 1.5 million homes are counted as ‘vacant’.

In a report out today, funded by the Nuffield Foundation, the Social Market Foundation urges the UK to adopt Canadian-style ‘housing sin taxes’, levying greater charges on foreign buyers and empty properties, and taxing houses sold soon after purchase.

The initiatives could generate much-needed revenue for the treasury, said Gideon Salutin, senior researcher at Social Market Foundation.

“1.5 million homes are left vacant in the UK, while 200,000 are owned by individuals who are not residents in the country,” he said.

“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.”

Advertising helps fund Big Issue’s mission to end poverty
Advertisement

Currently, the UK imposes a 2% surcharge on home purchases in England and Northern Ireland if the buyer lacks citizenship or residency. This rate pales in comparison to Australia, where non-resident excise taxes reach 15% in some states, or Canada, where they can skyrocket to 25%.

Last Spring, the Labour Party said it would consider increasing the surcharge on foreign buyers. A 25% tax on purchases by foreign buyers could potentially yield an annual revenue of £855m, the SMF suggests.

A vacant home tax could also generate a lot of money. Estimates suggest there are approximately 1.5 million vacant properties across the UK. A mere 1% value tax could inject billions into the Treasury. Australia and Canada have adopted similar measures, levying taxes of up to 3% on vacant properties.

Australia and Canada also fully tax gains made from the sale of a property if it is sold within a year of the purchase, essentially denying sellers the benefit of capital gains tax exemptions.

This tax is meant to discourage ‘house flipping’. If the UK implements it, the tax it would apply to 2.3% of home sales. A 50% tax on the profits from house flipping in the UK would raise £550m per year.

These objectives do not seem to increase housing supply, the SMF cautions. However, they have been effective at raising money. The revenue could be spent providing, for example, 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 SMF said.

Housing crisis: How many homes are empty in the UK?

1.5 million homes are “vacant” in the UK – not occupied a majority of the time. Some 261,189 properties are “long term empty” – meaning no one has occupied them for more than six months. That figure represents a rise of 12,556 homes compared to 2022, up 5% annually and 16% since before the pandemic in 2019.

Speaking to the Big Issue last year, Rebecca Moore, Action on Empty Homes director, said: “It beggars belief that while children are growing up sharing beds in temporary accommodation, our nation has over a quarter of a million homes sitting empty. To say this is a national disgrace is a profound understatement.

“Long-term empties are a huge missed opportunity to invest in green retrofit and create new jobs.”

Advertising helps fund Big Issue’s mission to end poverty

SIGN THE PETITION

Will you sign Big Issue's petition to ask Keir Starmer to pass a Poverty Zero law? It's time to hold government to account on poverty once and for all.

Recommended for you

Read All
Renter fury as no-fault eviction ban likely delayed until 2026: 'Let down yet again'
renters protest in London with protesters holding placards
Renting

Renter fury as no-fault eviction ban likely delayed until 2026: 'Let down yet again'

Public transport not keeping up with surge in new homes, analysis finds: 'We must plan more intelligently'
a bus
Public transport

Public transport not keeping up with surge in new homes, analysis finds: 'We must plan more intelligently'

Government pledge to help care leavers into social housing 'will literally save lives'
care leavers hand in petition at Downing Street
Social housing

Government pledge to help care leavers into social housing 'will literally save lives'

Social services threatened to take refugee's newborn baby away in row over horror hostel
A stock image of a baby's foot
Asylum accommodation

Social services threatened to take refugee's newborn baby away in row over horror hostel

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Citroën Ami: the tiny electric vehicle driving change with The Big Issue
4.

Citroën Ami: the tiny electric vehicle driving change with The Big Issue