BUDGET DAY: What the PRS wants the Chancellor to do

BUDGET DAY: What the PRS wants the Chancellor to do

11:11 AM, 14th March 2023, About 12 months ago 11

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Landlords and property investors will be watching Chancellor Jeremy Hunt to see what is in store for the private rented sector (PRS) in tomorrow’s Budget.

Among those urging the Chancellor to help landlords is the National Residential Landlords’ Association (NRLA) which is calling for a tax review of how private rented housing is taxed.

Its call comes after 30% of landlords said they were planning to sell homes.

The NRLA made its call in a submission to Government – and backed this up with data that shows a third of landlords are planning to sell – despite 65% reporting that demand is increasing.

Tax changes on the supply of homes to rent

The NRLA wants Mr Hunt and the Treasury to review the impact of all recent tax changes on the supply of homes to rent, including the restriction of mortgage interest relief.

They also point to the 3% stamp duty levy on the purchase of homes to rent out and, in the Autumn Statement last year, an effective hike in Capital Gains Tax.

The association instead wants pro-growth tax measures to encourage landlords to remain in the sector and grow their portfolios.

The NRLA is also calling for:

  • A sustained programme of support for landlords and homeowners, to help them make vital energy efficiency improvements to meet Net Zero targets
  • The reversal of the freeze on Local Housing Allowances (LHA) rates, which should be re-aligned to at least the 30th percentile of comparable local rents, with a Government commitment to maintaining rates at market rents
  • A full assessment of tenant support options including Discretionary Housing Payments (DHP) to ensure that those affected by the cost-of-living crisis have the help they need.

Benefits that housing investment can bring

The NRLA says it believes that last year’s Autumn Statement was a missed opportunity to remove barriers to the supply of housing and is now urging the Government to consider the full benefits that housing investment can bring to drive growth.

Ben Beadle, the organisation’s chief executive, said: “From students queuing to view properties, through to benefit claimants who struggle to access homes they can afford, the impact of the supply crisis in the rental market is stark.

“The harsh truth is that the Government’s efforts to discourage investment in the sector are working.

“But punitive taxation alongside record demand for rented housing is a disastrous combination that serves only to hurt renters – it is time to change tack.”

‘Not expecting any fireworks for the housing market’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “We’re told the Budget will be boring, so are not expecting any fireworks for the housing market.

“I would like to ask Jeremy Hunt – apart from trying to stabilise the economy and ease the cost-of-living crisis – please do something to increase the supply of good quality, energy-efficient homes to rent and buy.

“Greater availability of these will keep longer-term rents and prices in check so we don’t want the Chancellor to do anything which may reduce, or compromise, present activity levels.”

He added: “More specifically, we want to see greater encouragement of aspiring first-time buyers which would reduce the number renewing rental contracts and release much-needed stock, as well as softening rents and improving standards.

“Increased buyer/seller, landlord/tenant activity is not only good for the property industry but for the rest of the economy as well, due to its positive ‘multiplier’ impact on so many other businesses.

“We would like to see landlords incentivised, perhaps with nil-rate VAT to help them meet energy efficiency standards as part of a drive towards more retrofitting and net zero, provided tenants can be accommodated while works are in progress.”

Encourage buy-to-let landlords to stay invested

Mr Leaf also believes that more needs to be done to encourage buy-to-let landlords to stay invested and reduce the number who are leaving the sector.

He said: “Perhaps this could be achieved by re-introducing mortgage interest tax relief and re-adjusting stamp duty thresholds to coincide with the Rental Reform Bill becoming law.

“Easing planning restrictions, particularly for SME builders on smaller sites, would increase delivery and specifically improve first-time buyer accessibility.”

Cash to improve standards across the PRS

And one proptech boss is calling for more cash to improve standards across the PRS.

Neil Cobbold, the managing director of automated rental payment specialists PayProp UK, said that landlords feel under increasing pressure because of upcoming legislative changes, while tenants want to ensure complaints over ‘rogue’ landlords offering substandard homes are acted on by local authorities.

He wants to see the Chancellor encouraging good landlords to remain in the sector and continue investing in housing stock.

He said: “The most important thing is to keep the economy stable and to ease the cost-of-living crisis.

“But if the Chancellor does find that he has some wiggle room, he should give priority to the private rented sector.

“The PRS amounts to around 20% of the available housing stock in this country and when it faces a crisis, it affects society as a whole.”


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Comments

Shining Wit

11:39 AM, 14th March 2023, About 12 months ago

Doing something for the non-qualifying leaseholders caught up in the never ending Cladding Scandal would help.

I would have thought that P118 would have been more vocal on this issue which, ultimately, impacts everyone involved with property.

Rod

11:55 AM, 14th March 2023, About 12 months ago

iHowz also sent a submission to the Treasury with their requests to help support the PRS in tomorrow's budget.
https://ihowz.uk/ihowz-submission-to-hmrc-in-respect-of-the-spring-budget/
Key points were:
- Rescind Section 24 of the 2015 Finance Act
- Allow Registered Landlords to reclaim Supplemental 3% SDLT on rental properties.
- Remove the requirement to pay Supplemental 3% SDLT on lease extensions
- Index the Supplemental 3% SDLT threshold or link it to the standard SDLT threshold
- Extend period for filing CGT return to 6 months
- Make residential letting property a qualifying asset for CGT roll-over relief
- Remove CGT 8% surcharge, or some sort of retirement relief
- Restore the LHA link to local rents, returning it to the 30% percentile
- Energy Efficiency costs:
100% write down of costs in year of spend.
Grants with a long-term scheme which recognises a realistic approach (fabric first + achievable measures)
- Zero VAT rating should apply to Conversion, Refurbishment and Retrofit Works
- Legislation to stop council tax re-banding of individual rooms.

On the cladding scandal front, further progress was made this week, with several large house builders signing the self-remediation contract which requires developers to fix unsafe buildings from the past 30 years.
These included Vistry, Crest Nicholson, Persimmon, Redrow and Bellway.

David

12:10 PM, 14th March 2023, About 12 months ago

The problem here is that the most effective thing the chancellor could do to encourage landlords not the leave the sector would be to hike the rate of capital gains tax to 40%.

Crouchender

12:46 PM, 14th March 2023, About 12 months ago

Reply to the comment left by David at 14/03/2023 - 12:10
That's what Labour will do. They will hike CGT >50% so we will have to wait at least 5 years to sell our asset . Why 5 years. I think Labour will only be in for 1 term and hopefully the Conservatives will reflect on their current mistakes on PRS and the mess up that Labour will do to PRS while in power!!

Simon Williams

13:59 PM, 14th March 2023, About 12 months ago

I always think a good budget for the PRS is when nothing awful happens.

LaLo

15:30 PM, 14th March 2023, About 12 months ago

There are always “winners and losers” in budgets. Those that can afford to lose are generally the losers!

The Forever Tenant

17:04 PM, 14th March 2023, About 12 months ago

I guess I wish was that was the case, but it seems like of late there has been a lot of things lost from those that can least afford to lose them.

It always amuses me about what people expect to happen when Labour become the party in power.

What's really going to happen is not a lot. I cannot say that would be the case had Corbyn still been in power, but with the current group you have absolutely nothing to worry about.

It doubly amuses me that people can look back over everything that has happened to them over the past 13 years and they have decided that everything has been hunky dory, no problems whatsoever.

Now I don't know the answer to this bit, so maybe someone can help me, but which Government has been more detrimental to the PRS? The Conservatives for the last 13 years, or Labour for the 13 years before that? I honestly do not know so would be intrigued to hear your thoughts.

I do think there is a good chance that Labour will be a one term Government and for completely the wrong reason.

There are some financial difficulties for our country on the horizon. You can all feel it, you all know its there. It's looming and it's not likely far away. But if Labour get in and it all goes to pot, it will not who was in power for the preceding 14 years, they will blame whoever is in power when it happens. I have a theory in my head that the Conservatives are trying to lose the next election so that they can be sure they are not in power when the problems really start.

Finally in regards to the original post, the best thing to do for the economy, the PRS and the country in general. Get as much money as you can into the hands of the people on the lower rungs of the ladder. It's something that so many people hate the idea of. It's anathema to them. The big problem there though is it works.

Contendedted

21:26 PM, 14th March 2023, About 12 months ago

Reply to the comment left by The Forever Tenant at 14/03/2023 - 17:04
Well done. I don’t share your politics but you have set a nice tease because yes, the conservatives have been disastrous for landlords and so many others. In my town the labour wife took over from her late husband and then the Tory took over from her disgraced husband. It’s a nice little career for low flyers and every MP wants to hang on to power. Many seats hardly ever change hands. Votes could easily just be weighed.

Monty Bodkin

21:57 PM, 14th March 2023, About 12 months ago

"Now I don't know the answer to this bit, so maybe someone can help me, but which Government has been more detrimental to the PRS? The Conservatives for the last 13 years, or Labour for the 13 years before that? I honestly do not know so would be intrigued to hear your thoughts."

Margaret Thatcher transformed the private rental market for the good of both tenants and landlords.

The to$$pots that followed are just a weak sideshow in history.

Mark Alexander - Founder of Property118

1:56 AM, 15th March 2023, About 12 months ago

Reply to the comment left by Monty Bodkin at 14/03/2023 - 21:57
For me, the Blair administration provided 13 years of making hay. The Conservatives have spent the last seven years unwinding what Maggie created to enabled Blair and the champagne socialists to exist.

I’m just grateful I now live abroad and don’t get a vote, because the choice of voting for the least worst is the only choice people in the UK have at the moment.

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