The major political parties are being urged to take up the proposal, which aims to bring the 864,000 homes lying empty back into use.
The penalty of high tax should be combined with incentives such as grants for renovation and encouragement to sell homes to housing associations.
CIH chief executive Christine Laird said there was demand for more than 480,000 homes for rent, and some of the shortfall could be met by bringing empty homes back into use.
'An empty home is a wasted home,' Ms Laird said. According to the institute, it costs between £10 million and £30m to keep 10,000 homes empty.
'We need an incisive programme of action to tackle the backlog,' said Ms Laird.
The CIH cites a programme set up by Bristol City Council which has brought 250 homes back into use since October 1994 as an example of how the scheme might operate.
Sunderland City Council is also initiating an empty homes strategy with local agencies.
The institute will be promoting its initiative along with a series of practical proposals to address the housing shortage at the party conferences this autumn.