A stark warning has been issued to Chancellor Rachel Reeves against using the housing market as a convenient target for tax rises.

It’s come from the executive director of the Intermediary Mortgage Lenders Association (IMLA) – Kate Davies – who says such measures would fail to raise meaningful revenue and could instead choke off economic growth.

With the Treasury facing a £20 to 40 billion fiscal gap, IMLA’s latest analysis shows that all of the property tax ideas floated so far – such as National Insurance of landlords, a new annual property tax, council tax reform and capital gains tax on main residences – would raise insufficient funds to plug the gap. 

Davies comments: “These numbers simply don’t move the dial. 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.”

Davies says the government should focus instead on big-ticket reforms capable of generating significant income more quickly, even if that means making politically difficult choices.

“Tinkering with the housing market will not deliver what the government needs. 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 are a major driver of economic activity, supporting jobs in construction, conveyancing, surveying, removal services, home improvement and retail. A slowdown in sales has knock-on effects across multiple sectors.

“Boosting housing activity is one of the fastest and most effective ways to stimulate wider growth” continues Davies. “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 urging the government to develop a coherent housing strategy, harnessing private finance to support new building and long-term investment, rather than fiddling around the edges with short-term, politically motivated tax tweaks.