Owners of empty “ghost” homes who buy them as an investment and help to drive up house prices would be hit by bigger tax penalties under a Labour Government.
The move came as George Osborne came under fresh pressure to prevent the housing market overheating. The Organisation of Economic Co-operation and Development (OECD) called for “timely prudential measures to address the risks of excessive house price inflation” and suggested these could include “tighter access” to the Government’s Help to Buy scheme. "House prices... significantly exceed long-term averages relative to rents and household incomes,” said the Paris-based think tank.
The Chancellor could be forced by the Bank of England to halve the £600,000 maximum property for which the Government will guarantee a 95 per cent mortgage. Another option is to end the scheme in London, where house prices are rising twice as fast than in other regions.
About 60,000 homes in London are empty, despite the shortage of housing. Labour condemned that as “a scandal” as it announced that property owners, who often live abroad, would face double the normal council tax bill when a home had been empty for a year. At present, local authorities can impose a 50 per cent increase after two years.
Labour would ban developers from marketing properties to foreigners before British people get a chance to buy them. This follows criticism that apartments are sold to wealthy foreign investors while they are still being built. A Labour government would also close the loophole under which absentee owners avoid the current 50 per cent council tax surcharge by moving in “a table and chair.”
Ed Miliband told the London Evening Standard: “We’ve got to stop this phenomenon of empty properties being bought by overseas investors and nothing done about it.”
He said there was “a danger” of housing in London becoming closed to ordinary families unless action was taken to prevent them being priced out.
Mr Osborne said: “I’ve said we should be vigilant about the housing market and this Government has given the Bank of England the powers, the tools to do that in an independent way. That didn’t exist before but we’ve learnt from the mistakes of the last Government and the Bank has the tools and independence to do what it feels it needs to do to help to contribute to building that resilient economy.”
The Chancellor welcomed the OECD’s to revise its forecast for UK growth to 3.2 per cent – up from 2.4 per cent last November - as it said the recovery had now “taken hold.” Mr Osborne hailed this as “a real vote of confidence in the UK’s long term economic plan.”
Liam Bailey, global head of research at the estate agent Knight Frank, said: “The problem with measures to tackle empty homes, or under-occupied homes, whether sensible or not, fundamentally comes down to practicalities. Namely how Government can actually define and then identify empty homes. The practical implications of the policy are likely to be limited.”