Pt.1 Tax the rich, tackle the housing crisis

What do you reckon the most common type of business in the UK is?

It’s not restaurants or hairdressers or shops which enhance our communities, it’s buy-to-let housing firms. They now outnumber takeaways almost four to one.

One of the most lucrative activities in Britain is not to produce goods or provide a service which contributes towards our society and economy, it is simply to own something that you had no part in building or creating but which other people need.

The Common Wealth think tank recently found that the UK has also become the world’s biggest destination for overseas property investors. Homes here are seen firstly as investment opportunities for the rich rather than a fundamental human right for everyone, so is it any surprise that housing emergencies have been declared across the country?

In Scotland alone a record 10,360 children are in temporary accommodation while landlords hoard property and rake in unearned cash from people who simply need somewhere to live. 

Imagine you are parents with young children. Your food, fuel and energy bills have already gone up more than your pay and your extortionate rent means you have no chance of saving enough money for a deposit and the opportunity to own a home of your own.

Our tax system is a key engine that redistributes wealth in the wrong direction: away from the public and towards landlords. It's daylight robbery made legal, but over the next few weeks I’m giving MSPs the opportunity to change that.

Written by Patrick Harvie during the Scottish Greens’ time in Government, the Housing (Scotland) Bill is currently making its way through Parliament. If passed, it will deliver a permanent system of rent controls and massively expand the rights and protections of renters, for example giving them the right to decorate their homes and to keep pets.

It’s also the vehicle I’m using for an extensive package of property tax reform to end the sweetheart deals, loopholes and advantages currently enjoyed by the property speculators, landlords and wealthy elites who have done so much to cause the housing crisis.

Here’s what I’m proposing:

Make property speculators and corporate landlords pay

• For reasons I can’t even begin to get my head around, two types of companies infamous for property speculation and tax avoidance are specifically exempt from paying Land and Buildings Transaction Tax (the Scottish equivalent to Stamp Duty) when buying a property. The easiest thing we could possibly do, and the first proposal I’ve tabled for the Housing Bill, is to use powers which have sat untouched since 2013 and make open-ended investment companies and residential property holding companies pay LBTT.

• To tackle this growth in corporate landlordism, we need to do more than just charge them the regular rate of LBTT. In England companies pay a higher rate of Stamp Duty than individuals. I’ve tabled plans to add an extra corporate rate to LBTT as well.

• The Additional Dwelling Supplement is added to LBTT when you’re buying a property which won’t be your main home i.e. a holiday home or a buy-to-let property. I’ve already increased that from 4% to 8%, but it’s a blunt instrument and you pay the same rate whether it's your second property or your fortieth. Now I’m proposing a multiplier whereby the ADS tax rate gets higher for every additional property i.e. 8% for the second home, 12% for the third, 20% for the fourth etc.

Stop the spread of AirBnB

Count the key boxes outside tenement doors on a walk round most Edinburgh neighbourhoods and you’ll see the extent to which Airbnb-style short term lets have hollowed out so many communities. It’s the same in tourist hotspots across Scotland, from cities to rural and island communities - and it's forcing young people in particular to leave the areas they grew up in to find a home.

• Despite the widely acknowledged harm short term lets have done to many communities, they are almost always eligible for tax relief typically through the Small Business Bonus Scheme. I’m now asking MSPs to disqualify them from any relief scheme for Non-Domestic Rates (more commonly referred to as Business Rates).

• This is an emergency though, and bold measures are required. So, on top of removing their tax breaks I want to see an additional charge applied to Short Term Lets. This should push many operators to sell up, freeing up the properties for those who need somewhere to live.

These are some of the biggest reforms I’m proposing. They’re part of a much, much larger package though, so this feels like a good point to end my first Beehiiv post and return with Part II in a couple of days. 

That will cover tackling overseas ownership of Scottish land and property, the spread of holiday homes, the King, the US military and more. Make sure to subscribe to hear when that’s published!

We start voting on these proposals on May 6th, so there isn’t long to make your voice heard and help us redistribute power and wealth from the landlords, spivs and tax avoiders to ordinary people across Scotland.

If you like the sound of what I’m proposing, let your MSPs know. The Conservatives will never put renters ahead of landlords, but might the SNP, Labour or even the Lib Dems? In a few days time we’ll find out.