Call for new Chancellor to reverse decline in PRS

by Property 118

0:01 AM, 18th February 2020
About 8 months ago

Call for new Chancellor to reverse decline in PRS

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Call for new Chancellor to reverse decline in PRS

The Chancellor must use his first Budget to take immediate action to reverse the decline in the supply of rented housing, say landlords.

With landlords selling more properties than they are buying and others switching to short-term holiday lets for tax reasons, unless action is taken tenants are going to find it increasingly hard to find the home they want.

The 3% stamp duty levy on extra housing introduced in 2016, among other measures, has slowed investment in new rented property, with landlord confidence now extremely low. This drain in rental accommodation is being exacerbated by landlords being incentivised by the tax system to switch their properties to short-term lets. As a result, ARLA Propertymark has warned that almost half a million properties could be left unavailable for tenants in need of long-term homes to rent.

In their submission for the Budget, the Residential Landlords Association and the National Landlords Association argue that the tax system entirely contradicts the Government’s housing objectives.

The RLA and the NLA are calling for a fundamental review of the way rented housing is taxed to ensure that tax policy supports, rather than contradicts, government objectives. They propose that the stamp duty levy is dropped where landlords add to the net supply of housing through developing new properties, bringing empty homes back into use, or converting large properties into smaller, more affordable units of accommodation.

They propose that tenants are supported into homeownership by introducing a Capital Gains Tax exemption where landlords sell a property to a sitting tenant. In addition, they call for tax relief where landlords invest in measures to improve the energy efficiency of a rented property or let adapted properties long-term to tenants with accessibility needs.

David Smith, Policy Director for the Residential Landlords Association, said:

“The tax system for rented housing is failing. It encourages the provision of holiday homes over long-term properties to rent, it deters investment in new housing and provides no support to those wanting to make energy efficiency improvements.

“For the sake of those living in rented housing or who are looking for accommodation, Ministers need to use the Budget to urgently change course to ensure that their tax policies are positively aligned with their wider housing objectives to encourage good landlords to provide long-term affordable housing.”

Chris Norris, Director of Policy and Practice at the National Landlords Association, said:

“The tax system with which landlords must contend is no-longer fit for purpose. HM Treasury has constructed a series of barriers to investment, which make running an efficient and successful lettings business borderline impossible.

“As he prepares his first Budget, we hope that the Chancellor will take the opportunity to use taxation to encourage investment in new and existing homes alike. Mr Sunak must recognise that housing costs can only be reduced by making it easier, not harder, to provide good quality rented homes.

“The emphasis must be on finding solutions and encouraging investment across tenures amongst a diverse range of providers.”


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Comments

steve p

9:57 AM, 18th February 2020
About 8 months ago

The government will read that, totally miss the point and attack short term lets.

Whiteskifreak Surrey

11:10 AM, 18th February 2020
About 8 months ago

I would not hold my breath even for 20 sec. This is exactly what Osborne & Co wanted. Decline (probably a total destruction) of PRS, distressed LLs selling properties below their market value to cronies' BTL/BTR corporations, increase of ownership = society being in debt and easy to manipulate.
Where is "Boris the Landlords' friend"? I have been asking that question for some time and surprisingly (or perhaps not) those who believed in him and were very vocal about him are extremely quiet.
In other words - IMHO the situation is bad and will only get worse for LLs. Tenants have never mattered, especially those at the lowest end...

Elisabeth Beckett

11:18 AM, 18th February 2020
About 8 months ago

Why would anyone want to come into being a landlord in this environment where the government changes things we have budgeted for retrospectively making property an unprofitable business. Your article says the NLA suggests Landlords might be
'converting large properties into smaller, more affordable units of accommodation' but even this might mean if you convert something into six units in no time at all the council might start charging 6x council tax. It is all nonsense. What they should be campaigning for is that new tax and financial rules cannot be applied to retrospective purchases of buy to let properties. We, as responsible landlords, planned our costings of purchase, stamp duty, upgrading etc against achievable rents (minus tax liabilities and costs). The tax liabilities have increased, the bank rate increased a couple of years ago, insurance premiums have increased, council taxes have increased by around 5% for each of the last two years and licensing brought in to many more properties (with no justification of spend), no fees can be charged for tenant checks, AST agreements or deposit scheme costs. No business can keep having increased costs hitting them without having to pass these costs on to the tenants. If councils start charging per room for council tax on an HMO, my tenants are going to be very upset with a £1500 a year hike in rent through no fault of my own.... come on.... 9 housing ministers in 10 years, where is the continuity of someone who understands what's going on and plans a long term strategy out.

Hardworking Landlord

11:42 AM, 18th February 2020
About 8 months ago

Still, at least 'well behaved' pets will soon have better rights than less well behaved pets!

Old Mrs Landlord

13:16 PM, 18th February 2020
About 8 months ago

Sure, got to look on the bright side, haven't we? And Elizabeth Bennett won't have to worry about charges for ASTs because when S.21 is removed ASTs will also go. I'm sure others can think of further positives to focus on, even if only that most landlords have had enough and when they give up there will be a terrific choice of tenants to pick from, meaning rents will rise!

Steve Hards

12:19 PM, 22nd February 2020
About 8 months ago

If you are thinking of writing to your MP about it, the following article may be useful. It clearly explains how S24 can create an oppressive tax situation for landlords.
'Taxes on Britain’s landlords are complex, unfair and counter-productive'
https://capx.co/taxes-on-britains-landlords-are-complex-unfair-and-counter-productive/


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