How to create incentives for the PRS to grow

by Readers Question

9:00 AM, 1st February 2013
About 7 years ago

How to create incentives for the PRS to grow

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How to create incentives for the PRS to grow

How to create incentives for the PRS to growMark Garner, a regular reader of Property118 has very kindly written in to share these thoughts on simple changes the government could make to incentivise the necessary growth of the UK’s Private Rented Sector.  

What do you think?

To increase the size of the UK PRS the Government need to change their current policy on:-

Pensions – Allow SIPP’s to purchase residential property. Isn’t it crazy that we can invest our retirement funds into high risk Caribbean resports but not into providing much needed housing in the UK? 

House Planning – more houses need to be built on Brown then Green Belt. Perhaps the UK government should look at America and perhaps introduce ‘Zoning’ so then some developments could just be built for rental.

Taxation – introduce CGT roll over relief for private landlords and treat property rental profits as earned income not unearned income.

To move this forward I think we need to be working with the all the large housing groups who work closely with tenants as the Government will not see pleasing landlords as a vote winner but may see helping to provide homes for an ever growing number of tenants as a better vote winner.

In most respects landlords are treated like a business with all the current letting legislation (over 100 different pieces of legislation). However landlords are not allowed the same tax treatment as other business owners. This is a ridiculous situation, especially when the Government need to promote growth in the PRS to house an ever growing demand to rent from the UK population. I am all for growing the PRS to house people who wish to rent but all the current government policies (taxation and planning polices in particular) are stopping the growth so the result, sadly for tenants, yet good for existing landlords is that rents are rising.

 



Comments

7:21 AM, 2nd February 2013
About 7 years ago

The reason govt won't allow private property to be seen as a business is it makes too much much money from peoples' estates and grabs the resource to fund care home fees etc.
Govt won't wish to see the massive amount of equity go into pension schemes.
That is why they stopped people putting their properties into SIPPS.
Govt will never allow schemes which prevent them getting hold of capital gains from people when the biggest capital resource most people acquire in their lives is property capital.
So forget any govt assistance to treat the PRS as businesses.

10:10 AM, 2nd February 2013
About 7 years ago

Pensions – 100% agree that SIPP’s would be a great vehicle to manage a property portfolio and would encourage longer ownership and would negate the CGT issue around sales.

House Planning – Zoning may work and force planning departments to do more however personally I’d prefer the green belt protected from mass development and I’m 100% against developments for rental only – these produce ‘ghetto’ area and split communities in to them and us. More work needed on bring old properties back into use via grants or tax breaks.

Taxation – in principle this is a great idea and would encourage a more fluid property market, as landlords could move between property types or areas, as tenants requirements changed. However be very careful that any change to changing property income from ‘unearned’ may result in National Insurance being due!

15:28 PM, 25th April 2013
About 7 years ago

You were ahead of the game here, Mark. One month after you posted this article, the Chancellor announced the Government is consulting on whether residential property should be allowed within pension schemes.

To help George Osborne with his consultation, you can 'have your say' about this very matter here - http://www.sippclub.com/residential-property-in-a-sipp/

Mark Alexander

23:53 PM, 25th April 2013
About 7 years ago

Perhaps he reads my blog?

I wish! LOL


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