The Intermediary Mortgage Lenders Association (IMLA) has warned Chancellor Rachel Reeves against targeting the housing market for tax rises in next month’s Budget, arguing that such measures would do little to plug the Treasury’s fiscal gap while damaging economic growth.

With the Treasury reportedly facing a shortfall of between £20 billion and £40 billion, IMLA’s analysis suggests that all the housing-related tax options currently under discussion – including a new annual property tax, council tax reform and the introduction of capital gains tax on main residences – would together raise less than £6 billion.

“These numbers simply don’t move the dial,” said Kate Davies (pictured), executive director of IMLA. “The Chancellor should resist the temptation to reach for politically easy but economically damaging options.

“Most of the property-related measures being discussed would deliver minimal revenue, take years to implement and undermine confidence in the housing market.”

DON’T TINKER

Davies said the government should instead focus on reforms capable of generating meaningful income and supporting economic expansion. “Tinkering with the housing market will not deliver what the government needs,” she added.

“If ministers want growth, they should look at broader, bolder measures that can genuinely raise revenue and support investment. Small, piecemeal tax changes will just add uncertainty, hurt confidence and slow activity at exactly the wrong time.”

Housing transactions, she noted, underpin a wide network of industries including construction, conveyancing, surveying, removals, home improvement and retail. Any decline in property sales risks stalling those sectors.

“Boosting housing activity is one of the fastest and most effective ways to stimulate wider growth,” Davies said. “Dampening it will have the opposite effect. The inevitable result of squeezing landlords and homeowners further will be fewer rental homes, higher rents and more misery for renters.”

IMLA is calling for a comprehensive housing strategy that encourages private finance to support new development and long-term investment. “Uncertainty is deeply damaging to business confidence,” Davies said.

“We may not like every decision the Chancellor takes, but the market will respond far better to clarity and conviction than to dithering and indecision.”