Landlord tax burden has hurt the UK’s PRS – Propertymark
12:02 AM, 9th September 2024, 2 years ago
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The damage caused to the private rented sector (PRS) by burdensome taxation has been revealed in a new report.
The study by Propertymark, entitled ‘The Impact of Section 24 on Buy-to-Let Landlords’, examines the consequences of Section 24, a policy implemented by former Chancellor George Osborne.
That move reduced tax relief on mortgage interest costs and eliminated the 10% wear and tear allowance for furnished properties.
However, the policy has severely hindered investment opportunities, as landlords can no longer offset finance costs against their taxes in the same way.
As a result, many landlords are facing higher taxes, with some operating at a loss – and has led to a decline in standards and made it financially unsustainable to provide high-quality rental homes.
Section 24 is having an impact
Propertymark’s chief executive, Nathan Emerson, said: “Section 24 is having an impact on the private rental sector, and with a budget being announced for October, Propertymark are keen to see the UK Government to consider scrapping this measure.
“We need to see a level of support that encourages long term investment within the private rented sector and recognises the understanding that private landlords play a crucial role when comes to providing diverse, safe and secure housing across the entire UK.”
Landlords have adapted coping strategies
In response to Section 24, landlords have been forced to adopt various coping strategies, including imposing higher rents.
Also, the report highlights the negative impact of tighter maintenance budgets due to reduced cash flow impacting tenants.
There are growing concerns that landlords may consider reducing their property portfolios or exiting the sector altogether.
Landlords have also expressed concerns about the proposed Renters’ Rights Bill and its potential impact.
To address these issues, the report recommends that taxes on additional properties and capital gains tax thresholds be reduced to promote long-term investment in the PRS.
Tags:
#Taxation, Impact of Section 24 on landlords, Landlord tax burden UK 2024, Private Rental Sector, Property investment, Propertymark report on landlord taxation, PRS investment opportunities, renters rights bill, section 24, UK Landlords, UK private rented sector challenges
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Member Since December 2023 - Comments: 1587
8:35 AM, 9th September 2024, About 2 years ago
It’s certainly true that landlords have suffered at the hands of the insidious Gideon Osborne and this manifestly unfair tax on turnover. No other business suffers in this way.
However, the main victims are tenants. Higher rents and lower standards are inevitable unintended consequences of this ridiculous tax. A kind of VAT that only impacts renters who have higher rate taxpaying landlords. Tenants in neighbouring and identical homes could have different rents for the sole reason that their landlords’ earnings differ.
Member Since January 2017 - Comments: 113
10:45 AM, 9th September 2024, About 2 years ago
So, does anyone think governments take any notice of such reports or those involved in the PRS?
Member Since August 2016 - Comments: 1190
3:13 PM, 9th September 2024, About 2 years ago
I wouldn’t put it past Labour to remove the 20% interest tax credit in the budget.
Member Since May 2023 - Comments: 3
8:09 AM, 10th September 2024, About 2 years ago
Interesting I thought as costs increase you just pass it all onto the tenant. This article suggests that isn’t always possible. So I’m guessing supply and demand sets the rent not legislation.
Member Since October 2022 - Comments: 205
9:21 AM, 10th September 2024, About 2 years ago
The last government set up these policies with the express intention of strangling the PRS. Clearly it is working. The current government is only going to tighten the screws until the hated landlord class goes “pop”!
Unless and until the message gets home about how much they are also hurting the ordinary person trying to get a place to rent, such reports are only going to be music to their ears.
In the meanwhile, the unfulfilled demand is pushing up rents in a way that was inconceivable before the pandemic.