Wealth tax would help first-time buyers as prices soar in Filey and across National Parks – Kevin Hollinrake

The reality is that we are already intervening in the market by creating that scarcity through the planning process.

Certainly, second homes are having a very big effect, creating even greater pressures and affordability constraints in some of these rural areas, and many urban areas face the same kinds of issues.

Tory MP Kevin Hollinrake calls for £5bn wealth tax on UK second home owners living overseas

Ryedale Council covers much of my patch, where the average house price is around £300,000, with an average earnings to house price ratio of about 8.7.

In Hambleton, the ratio is 7.2, and in other places, such as Filey – attractive coastal resorts – prices are going up, and the increasing number of holiday lets is putting further pressure on local people’s ability to find properties to rent and purchase.

We cannot just rely on a supply and demand equation to solve all those problems; we must look at different interventions.

What the Government have done through the First Homes Scheme is part of the solution to this problem. It is an excellent policy.

Transfer values in my area from developers to housing associations are below half-price, and there is no reason why some of those houses cannot be made available to purchase in perpetuity through discounts of half-price or even below half-price.

I urge the Government to rename the whole First Homes policy “half-price homes”, because we could deliver many properties around the country to local first-time buyers at half-price.

That would make a significant difference and would mean that young first-time buyers could buy properties in my constituency that would cost four or five times their average earnings, which would bring those homes in scope for lots of those people.

I fully concede that this is not all about affordable homes for purchase – we also need affordable homes to rent, shared ownership and lots of other things – 
but First Homes is a very important policy that we should be driving further forward.

Taxation is bound to come into this conversation. Clearly, the Government believe that already: there is already a three per cent stamp duty surcharge for second homes, so Ministers believe we need to do something about second homes to try to level the playing field between investors, second home owners, first-time buyers and other buyers in our constituencies.

This is not uncharted territory for this Government, so we should have a conversation about whether we should have a council tax surcharge as well.

There is a perfectly sensible conversation to be had here, while recognising that the Conservative Party believes in freedom of choice, so if somebody wants to use their money to buy a second home in a different part of the country as an investment or a place to live, we should not be totally against that. It is about trying to strike a balance between those two things to make it a fair and level playing field.

Another area that could make a big difference and that could fund lots of different activities would be the way we tax non-resident overseas owners. This could be in rural areas or urban areas.

I do not think there is any argument for not taxing those people pretty heavily if they own property in the UK and are non-resident. We already have a surcharge for overseas owners. These people are having a profound effect on some house prices in urban areas as well as rural areas.

I think 28 per cent of properties sold above £2m are bought by overseas owners. Around 20 per cent of all properties in London – and probably a decent quantity in York and other cities – are owned by overseas residents.

I do not see a reason why we would not seek to tax those people even more heavily than with a 100 per cent increase in council tax.

Roughly, if we applied a one per cent wealth tax on UK properties – this is only for overseas owners, not UK residents – it would raise £4bn to £5bn a year. There would still be an incentive for those people to invest their money in the UK, but this would make it a fair and level playing field. I would recommend that we put that money a into the First Homes programme, increasing the number of properties available to local, first-time buyers keen to get into the housing market and make our communities sustainable.

Kevin Hollinrake is Tory MP for Thirsk and Malton. He spoke in a Parliamentary debate on second homes – this is an edited version.

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