‘Time to let councils raise and spend taxes’
The UK would produce more housing if councils were able to actually spend the money they raise in taxes, according to property investment firm.
This is because they’d have more incentive to encourage developments, especially as property taxes make up such a high proportion of the money they rake in.
Adam MacLeod, partner at Castleforge (pictured, right), said: “Local councils cannot raise and spend tax – they raise tax and then it goes to the central government.
“Therefore there is zero incentive for a local council to build housing. If anything it’s a disincentive, as housing annoys residents.”
Housing secretary Michael Gove championed building a new urban quarter in Cambridge this year, but there’s been pushback – outlining how it’s so difficult politically to increase supply.
Anthony Browne, MP for South Cambridgeshire, responded by saying he will fight “nonsense” housebuilding plans in Cambridge in July, despite the obvious demand from people to live there.
Michael Kovacs, founding partner at the Castleforge (pictured, left), made other suggestions on how more residential and commercial stock could be built.
Namely, he said the planning system should be reformed by a rules-based zoning system set by local councils, while stamp duty should be replaced by an annual property tax.
He said: “In the UK if you have a piece of land you have no right to build anything on it until you ask the local government, who will then give you that right after going through a lengthy, expensive process, and they say yes or no.
“In the US and in a lot of civil jurisdictions, that land is pre-allocated and pre-zoned. The local government gets together every 10 years and everybody says ‘this area of town is for housing’ or ‘this area of town is for mixed use development’.
“If you buy that land you know what you can build on it and you can start building on day one – it’s the uncertainty of not knowing that creates the real mess.”
Kovacs added: “The issue with stamp duty is you pay it once and you can live in it for 100 years.”