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Landlords would pay tenants’ council tax under new Labour plan

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Landlords could be responsible for paying their tenants’ council tax under plans being considered by the Labour Party. 

The policy idea is contained in a new report calling on Labour to make a string of “radical but practical changes in the way land in the UK is used and governed” if it wins the next election. 

The council tax charge would be replaced with a new “progressive property tax” set nationally rather than by local councils and paid for by landlords instead of tenants.

Owners of empty homes, second homes and those owned by people not resident in the UK for tax purposes would have to pay the new tax at a “significantly” higher rate says the report. 

Major reforms 

The report urges major changes to the property tax system in a bid to “discourage the use of homes as financial assets, reduce the tax paid by the majority of households, and encourage more efficient use of the housing stock”.

Other suggested reforms include:

  • tenancies being open-ended;
  • landlords losing their power to evict a tenant who has not broken the terms of the tenancy agreement for the first three years of the tenancy agreement and providing grounds for eviction after that point;
  • a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower);
  • buy-to-let mortgages being firmly regulated and restricted. 

Responding to the report, the Residential Landlords Association (RLA) believes the plans could have a devastating impact on tenants and landlords alike, as more and more people look to the private rented sector for a home.

RLA policy director David Smith said: “This plan would be hugely damaging for tenants and landlords alike. 

“Our evidence shows increasing numbers of landlords are already selling up as a result of recent tax and legislative changes – the latest of which is the abolition of Section 21 repossession powers … forcing landlords out of the sector does not create more homes”.