Landlord tax reforms enabled a claimed 1.1 million first-time property purchases

Government tax policies targeting private landlords have enabled 1.1 million households to secure their first property purchases, research claims.

A study by the Joseph Rowntree Foundation found that taxes on individual landlords and higher stamp duty charges for additional properties, implemented from 2016 onwards, have fundamentally altered Britain’s housing landscape.

The foundation’s policy adviser Darren Baxter says that slowing expansion of the private rented sector has created opportunities for aspiring homeowners.

But the claim has been debunked by the National Residential Landlords Association which says higher landlord taxes don’t help renters to buy.

Instead, as landlords leave the PRS, rental supply diminishes and rents go up, it says.

Taxing landlords helps renters buy

Mr Baxter said: “The previous government rightly recognised that the tax system had swung too far in favour of landlords over and above people looking to buy their first home.

“Tax reforms introduced to address this imbalance have allowed more first-time buyers, including young people, to own their own home.”

He added: “This has been achieved without the dire consequences for renters predicted by those opposed to taxes on landlords.”

The research shows that England’s PRS saw dramatic growth from 2000, doubling in size but in recent years growth has stagnated.

Big tax change for landlords

The foundation says the big change in moving rented homes to owner-occupation came after the 2015 Budget when landlords could no longer offset their borrowing costs against rental income when determining taxable profits.

Plus, additional property stamp duty charges increased purchasing expenses by 3% after the 2015 spending review, later climbing to 5% in last year’s autumn budget.

Landlords have also seen changes to furnished holiday lettings taxation rules and multiple dwellings stamp duty relief arrangements.

Higher landlord taxes don’t help tenants

In response, the NRLA’s chief executive, Ben Beadle, said: “The idea that higher taxes are good for renters is simply not correct.

“Both the former head of the Institute for Fiscal Studies and the current Housing Minister agree that tax policy affects rent levels.

“It is not clear how higher taxes, leading to higher rents, makes it easier for tenants to save for a home of their own.”

He added that according to Rightmove, while housing supply has improved, an average of 11 renters are chasing every home to rent.

He said: “Further tax hikes will serve only to dampen investment in the sector, undermine tenant choice and push rents even higher.

“For millions of people, the private rented sector is vital for ensuring they have a place to call home.

“Rather than more piecemeal tax grabs, the government should use the tax system more strategically.”

By doing so, he says, long-term investment in quality rental housing would be encouraged and it would create an incentive for landlords to bring long-term empty homes back into use.

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