Labour’s conference policy blitz continued this morning with an announcement from the shadow housing secretary John Healey: that a Labour government will hit buy-to-let holiday homes with an additional tax – an extra payment at the double the rate of council tax levied on those homes currently.
The party’s plan is effectively to tax the sector out of existence. Though neither will like the comparison, George Osborne tried to do something similar with buy-to-let in 2015. Osborne did successfully take some of the heat out of the top end of the buy-to-let market but no-one would say with a straight face that buy-to-let isn’t still going strong in 2018.
Will Labour’s policy be any more successful? Well, it’s hard to say with any confidence but as it is quite a hefty additional bill it feels likely. If anything I’d be more worried about the reverse problem: what the British economy needs is for a number of buy-to-let landlords to exit the market but ideally not in a speed and manner that triggers a wider economic slowdown. But it’s hard to work out the balance between measures that don’t discourage the proliferation of buy-to-let and measures that actively trigger a disorderly crash in the buy-to-let market. (If you think your landlord is bad now, wait until they are trapped in negative equity and have costs they can no longer service.)
Sensibly, they’ve hypothecated the revenue towards alleviating a crisis (the number of people who are homeless, whether that be as rough sleepers or who are living in hostels and BnBs) rather than financing ongoing spending as you’d expect revenues from the levy to peak immediately after it was introduced and tail off very rapidly thereafter.
From a political perspective, it’s a good example of what the Opposition wants the message out of this conference to be: an all-out-assault on the wealthy to give something – in this case a home – to everyone else. Labour will be disappointed, however, that the policy hasn’t started an eyecatching fight with any prominent landlords or their lobbying organisations.
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