When it comes to provoking anger in property professionals, taxation takes some beating. Press releases are still arriving berating the December 2014 reform on stamp duty and its effect on the top end of the market.
Ahead of each Budget and both General Elections since the Osborne reform, some within the industry have had the belief - let’s be honest, it’s just been the hope - that government will reverse a tax change that has simultaneously provided it with substantial revenue and has cooled down what was seen as a politically-unacceptable runaway London market.
But if as an industry we continue to be distracted by the hope of a change over stamp duty, we may be ignoring a much, much bigger tax change which I believe is on the horizon.
That is, the introduction of Capital Gains Tax on profits from the sale of principal homes.
Nothing has been said out loud, of course, but you don’t need an investigative journalist to spot the signs emerging from increasingly influential sources.
Let’s start in 2014 with Kate Barker, the housing economist and former member of the Bank of England monetary policy committee. In her book Housing: Where’s The Plan? she wrote: “Charging CGT on gains on our main residences would bring taxation of housing more into line with other assets, and would tend to discourage over-investment in housing."
“Changes in house prices often result from public policy: restrictions on neighbouring land, transport links, or the quality of a nearby school, for example. It is odd not to tax these gains, which the homeowner has done nothing to earn, but charge CGT on the profits from selling a business enterprise. But it would undoubtedly face very strong public, and therefore, political, opposition."
“This reform could lower the rate of housing inflation (as the effective tax rate on owner occupation is increased) and reduce the incentive to hold housing assets for investment motives. It would improve equality by increasing the ability of those not lucky enough to inherit a share of a property to compete in the housing market.”
By 2015 the Daily Telegraph’s Richard Dyson - that paper’s personal finance editor and a journalist who really understands property - moved on to the subject.
Writing about a possible cap on inheritance tax, he said: “Might not the concept of such a cap be a trigger for policymakers to look at the other property-related tax break – the vast elephant in the room that is 100 per cent capital gains tax exemption on main homes?"
“Under the ‘private residence relief’ rules, capital gains tax doesn’t apply to any gains made on a qualifying home. In the more comfortable past when property was generally within reach, and prices less varied by region, this might have seemed a benign and uncontroversial tax break."
“But now – when the gap between house prices in different areas is at its widest ever and widening further – you could understand a government of any hue looking at the CGT break and saying it needed to be capped.”
Fast forward another year to 2016 and the National Institute of Economic and Social Research (Niesr) claims that high house prices are deterring young first-time buyers.
“If a capital gains tax were introduced, this would reduce the gains in an upturn and losses in a downturn, so dampening house price cycles” Niesr wrote in a report about the alleged unfairness in the distribution of home ownership across different generations."
That brings us to 2017 and Prime Minister Theresa May (or perhaps, given the situation, we should say Prime Minister At The Time Of Writing, Theresa May).
The idea didn’t get in the Conservative manifesto for the General Election but once again the abolition of CGT relief on main homes was raised - and this time, by the ruling party.
In early May, shortly after the election was called, reports in the Sun and the Daily Telegraph both suggested CGT was on its way for main homes. Iain Dale, a publisher and political commentator and former Conservative parliamentary candidate, wrote on Twitter about the possibility and in a TV interview with Andrew Marr, in response to a specific question on the introduction of CGT on main homes, May was less than straightforward.
“If you look at what has happened in terms of tax, the top one per cent of people are paying a higher share of tax under us than they did in any year under a Labour government ... I think it is right that we should ensure the tax system is balanced and, as I have been clear, it would be my intention to reduce taxes on working families,” she told Marr, conspicuously failing to deny she would to reform CGT.
Of course, the proposal didn’t reach that ill-fated manifesto and, perhaps, the political shockwaves such a reform would make in today’s febrile climate means it’s off the table - but if so, it is only a temporary respite.
With public spending set to rise - not just to pay the bung to the Democratic Unionists but also to fund even larger sums for social care, to ease austerity and erode the cap on public sector pay - it is unlikely that higher taxation will be off the agenda for long.
For the property sector to continue calling for further reform of stamp duty to make it easier to buy high value homes is, to put it at its kindest, optimistic. Such calls are also off-target, because politicians are already moving on from stamp duty to look at CGT: it’s time for the campaigners against property taxation to catch up and do the same thing.
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn