David Alexander is joint managing director of leading property management company Apropos by DJ Alexander
The latest report by the Resolution Foundation entitled ‘Taking Stock’ which it produced for the Scottish Poverty and Inequality Commission contains some interesting but also contradictory and potentially difficult proposals which aim to address equality issues in the housing sector in Scotland through higher taxation of homeowners.
The report, which broadly states that a disparity in housing wealth has arisen over the last 50 years between those who own property and those who don’t. This wealth has become concentrated in the older population as well as certain geographic hotspots where house prices have significantly increased. Their proposed solution is much higher council taxes on more valuable properties, greater taxation of second homes, and the money raised used to reduce the property wealth gap through building more affordable homes.
The report states: “when the evidence shows so clearly that the huge housing wealth gains of the past fifty years have been largely unearned, that many people locked out of the wealth owning group struggle with housing costs today, and the main property tax has grown so inequitable and inefficient, the case for action is clear.”
This notion that all homeowners have made gains without effort, without sacrifice, and that they are somehow to blame for housing inequality is, at best, naïve and, at worst, disingenuous. Many people sacrifice a lot to invest in their homes and to suggest otherwise is wrong.
Large increases in council taxes for more valuable homes would affect young professional couples who may have a valuable house but little cash, retired folk with modest pensions, and professionals seeking a career in Scotland. The impact would be wide ranging and could have serious unexpected consequences for the Scottish housing market, the ability of Scotland to attract investment, businesses and well qualified, better off people.
Part of the report’s contradictory view is that things have got worse. In 1968 private property ownership accounted for half of all dwellings in Scotland which had risen to 65% by 2018. Surely, more homeowners’ means property wealth has been spread wider.
Scots homeowners are already the most highly taxed in the UK through existing property and income taxes. Adding a substantial increase in council tax could make more people reconsider where they want to live when much cheaper options exist just 60 miles away. There is undoubtedly a case for improved housing provision for everyone in Scotland, but this requires a coordinated approach involving greater access to homeownership, involving closer working with the private rented sector, and a concentrated effort to increase social housing provision rather than an attack on wealth held in peoples’ homes.