Ross Clark Ross Clark

If Cameron really wanted to encourage home-ownership, he would increase inheritance tax

‘The dream of a property-owning democracy is alive,’ David Cameron will say today as he launches the Conservative manifesto, promising to extend the right to buy to all 1.3 million housing association tenants. Why, then, if he wants to promote a property-owning democracy is he also proposing to raise allowances for inheritance tax, allowing people to inherit homes worth up to £1 million without paying a penny in tax?

Inherited wealth is a huge factor in the concentration of property-wealth in ever fewer hands. This is what happens: middle-aged couple inherit large family home. They then sell it and reinvest the money in several buy-to-let properties, outbidding in the process several first time buyers who are as a result forced to rent a home instead. Here is a taste of the importance of inherited money in the property market.

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