Daily Mail·United Kingdom·Wednesday, October 7, 2026 at 11:55 PM UTC

Cutting property taxes speaks to something deeply ingrained in our psyche - and will boost the economy too: DANIEL HANNAN

Translate

Daniel Hannan

An Englishman's home is his castle. The phrase goes back to the 16th century, and so does the philosophy it crystallises. We all yearn for a private space, a space where our rulers cannot boss us around, a space where we might arrange our affairs as we wish, speak our minds, behave in any way we please.

The mighty jurist Sir Edward Coke, who did as much as anyone to codify our understanding of the common law, put it like this as long ago as 1628: 'For a man's house is his castle, et domus sua cuique est tutissimum refugium [and each man's home is his safest refuge].'

That is why we resent the idea of government inspectors demanding access to our homes in order to assess them for inheritance tax or for the coming mansion tax.

And it is why Kemi Badenoch's pledge to scrap both taxes is so popular, even among people who are not themselves affected.

Britain, like most Anglosphere countries, has a peculiar fondness for home ownership. In, say, Germany there are as many people who rent their homes as who own them. In the UK, there are twice as many owner-occupiers as there are tenants.

Economists argue about whether this is a good thing. High levels of home ownership give people assets, and thus collateral against which they can raise loans and start businesses; at the same time, though, labour mobility tends to be higher when home ownership is lower.

The greatest advantage of owner-occupation, however, is psychological. It gives us a stake in order, in security, in prosperity – in short, a stake in our country.

That, I think, is why we are so resentful of taxes that discourage what we think of as responsible behaviour – taxes, in other words, that penalise our desire to join a property-owning society.

Kemi Badenoch has pledged to scrap inheritance tax on properties should the Tories win the next election

The Tory leader has promised to exempt family homes, together with £1million in assets, from inheritance tax, to scrap Labour's mansion tax and to abolish stamp duty.

These are popular pledges among propertied people. More to the point, though, they will stimulate growth that benefits everyone, including those who do not own their homes.

Let's start with inheritance tax, an administratively costly and complex tax to levy. Ten OECD countries, including Australia, Canada and New Zealand, have scrapped inheritance tax altogether. In each case, they had worked out that its negative impact on growth outweighed the small amounts of revenue it was raising.

Sweden, to take a recent example, abolished inheritance tax in 2004. Immediately, family-owned businesses began investing more and growing faster.

It turned out that, under the old tax regime, owners of family firms had been withdrawing capital from them in anticipation of their heirs' inheritance tax liability. Now, they instead plough the money back into the business, which means that Sweden ends up with more overall tax revenue. The Conservatives might usefully ask themselves whether, having come this far, it would not be sensible to scrap inheritance tax completely, get rid of all the administrative complexity, and reap the benefit of more economic activity.

The only question we should ask about any tax is whether it is efficient. Does it bring in a decent chunk of revenue without creating perverse incentives?

Or do its secondary consequences lead to a net loss of revenue – as, for example, when inheritance tax reaches a level where people take themselves or their assets offshore, and so end up paying less income tax?

As a rule, politicians do not ask that question. They ask instead what 'seems fair', or who should pay, or what polls well.

Hence the persistent appeal of taxes on savings and investment – the most damaging taxes in terms of growth, but also the most popular among voters who, largely ignorant of economics, like any tax that they imagine will fall on others.

One of the chief problems with property taxes is that they inflate the price of moving house. People who might downsize and so free up space cannot afford to do so. At the other end of the scale, people trying to afford their first home are also penalised.

This harms our quality of life in many ways. We rarely stop to consider how excessive housing costs contribute to our low savings ratio, or to the unusually long hours we work.

It also makes Britain a less attractive place to invest. Suppose you are a multinational firm deciding where to site a major business centre. The UK has an educated and English-speaking workforce. But because housing costs here are so inflated, you will need to pay much higher wages to compensate.

So, yes, if you want to make Britain a more competitive and productive nation, making housing cheaper is a good place to start. Until now, all the parties have failed this test.

The Tories tried to address the problem with the right-to-buy scheme, which simply shifted the problem. Yes, it gave some buyers extra capital, but it did not increase the supply of houses, so it meant less availability and higher prices for everyone else.

Labour has now made things worse by introducing rent controls, thereby reducing supply even more. Both these schemes relied on more state intervention to fix a problem created by state intervention – more of the medicine that sickened the patient.

The real solution is drastically to liberalise planning laws so as to allow new houses to be built – something that would not cost taxpayers a penny, and would immediately make Britain a much wealthier place.

In the meantime, though, cutting taxes on property is a welcome step in the right direction.

It is paradoxical. As housing has become more expensive, so the state has become more intrusive. In 1763, Pitt the Elder gave perhaps the most rousing version of the Englishman's-home-is-his-castle principle: 'The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail – its roof may shake – the wind may blow through it – the storm may enter – the rain may enter – but the King of England cannot enter!'

Those were the days. In 1974, Sir Richard Stilgoe wrote a comic song, Statutory Right Of Entry, about the seven categories of official who might enter your home without permission.

In 2007, a study by the Centre for Policy Studies found that there were now 266 legal acts in force that enabled state agents to enter private properties, the main growth having taken place in the 1990s.

In 2012, an official review under the Protection of Freedoms Act ran the numbers for all defined premises (businesses, vehicles and private land as well as dwellings). It found 1,237 rights of entry, and reduced them to 912.

We are, by any definition, a long way from Pitt the Elder.

Indeed, in Scotland, a change in the law in 2024 means that people can be prosecuted for hate speech if they say the wrong thing at their own kitchen table. When George Orwell imagined his futuristic dystopia, he had telescreens watching people in their homes.

Privacy and ownership are what distinguish free societies from totalitarian ones.

Removing excessive and punitive taxes from our houses is not, on its own, going to reverse the unhappy growth of state power here. But it's a start. By heaven, it's a start.

Lord Hannan of Kingsclere is an independent peer and Director of the Institute of Economic Affairs

View the original on Daily Mail →

KioskNews shows a cleaned-up reading view extracted from the publisher’s page — the original always lives on their site, not ours.