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Housing tax plan is &#39lead balloon&#39

A call by the Royal Institute of Chartered Surveyors for greater use of the tax system to control volatile house prices rather than relying on interest rates has been slammed by mortgage experts.

The wide ranging initiatives, such as levying council tax on empty and second homes and reducing stamp duty in deprived areas, are some of the radical recommendations in the RICS manifesto, Housing the Nation, which was published this week.

It puts forward the case for European-style mortgages offering fixed rates over the whole term, a wide-reaching review of housing-related tax and harmonisation of VAT on new build and repairs.

But Wriglesworth consultancy analyst John Wriglesworth has criticised the rep- ort, saying interest rates are a more delicate way to control prices than tax and can be easily altered, while taxes are more inflexible and any chan-ges are long term.

He says: “It smacks of being ill thought out and using a sledgehammer to crack a small nut. The abolition of mortgage tax relief led to the last housing market crash – the use of tax does not have a great pedigree.”

Charcol senior technical manager Ray Boulger warns: “Tax on residential property would go down like a lead balloon and is a surefire way to lose the next election. It would be political suicide.”

Boulger says more mortgages with rates fixed for the whole term would prove unpopular as rates would be higher at the outset and borrowers do not like being locked into a deal.

RICS housing policy panel chairman Michael Newey says: “This manifesto makes the radical recommendations which we believe are needed to give the country stability.”

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