The Intermediary Mortgage Lenders Association (IMLA) has issued a stark warning to Chancellor Rachel Reeves against using the housing market as a convenient target for tax rises in November’s Budget, saying that such measures would fail to raise meaningful revenue and could instead choke off economic growth.
With the Treasury facing a £20 to 40 billion fiscal gap, IMLA’s latest analysis shows that all of the property tax ideas floated so far, including a new annual property tax, council tax reform and capital gains tax on main residences, would together raise less than £6 billion.
The trade body says housing transactions are a major driver of economic activity, supporting jobs in construction, conveyancing, surveying, removal services, home improvement and retail - therefore a slowdown in sales would have knock-on effects across multiple sectors.
IMLA is instead urging the government to develop a "coherent housing strategy", harnessing private finance to support new building and long-term investment, rather than "fiddling around the edges with short-term, politically motivated tax tweaks".
Kate Davies, 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 said the government should focus instead on big-ticket reforms capable of generating significant income more quickly, even if that means making politically difficult choices.
She added: “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.
“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.
“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.”
