Landlords need to be incentivised and not driven from the PRS – Propertymark

Landlords need to be incentivised and not driven from the PRS – Propertymark

10:17 AM, 5th September 2023, About 9 months ago

Text Size

The government needs to focus on its tax policies so that landlords in the private rented sector (PRS) are incentivised to remain and help house people and not be forced out.

That’s the verdict of Propertymark which is highlighting the steps that need to be taken now to boost investment and help reduce rents.

And for that to happen, the government must review the impact of financial and tax changes on landlords.

The detrimental impact of government decisions

Propertymark says it has analysed the impact of these changes to highlight the detrimental impact that government decisions since 2015 have had on the tax and financial situation for landlords.

These have led to the current shortage of homes to rent.

And while landlords are not immune to rising expenses and the cost-of-living crisis, legislative changes – with more being planned – have put landlords off investing.

Among the issues highlighted in a report are higher rates of tax on initial property purchases.

Under stamp duty land tax rules in England and Northern Ireland, a buy to let landlord buying an additional property for £290,000 can expect to pay £10,700 in stamp duty, when a main resident would only pay £2,000.

Land and buildings transaction tax on an additional property

In Scotland, land and buildings transaction tax on an additional property valued at £185,000 would be £11,900 for a BTL investor, with a main resident only paying £800.

The situation in Wales is even more stark, as a BTL landlord would pay nearly £10,000 in land transaction tax for an additional property, based on an average Welsh house price of £215,000.

A main resident would pay nothing.

Propertymark also points to CGT rates being cut in 2016 for top-rate taxpayers from 28% to 20%, and from 18% to 10% for lower earners.

However, landlords were excluded from the cuts meaning that while the sale of shares in a company that owns the property would incur CGT at 20%, individuals making reasonable gains on the sale of a second property would face the existing 28%.

Recognise the impact of the current tax regime

Propertymark is now calling on the UK’s governments to recognise the impact of the current tax regime on the availability of homes in the PRS – and the costs being passed on to tenants.

It says there are six areas that could offer incentives including long term tax policies to encourage landlord investment, and the reinstatement of mortgage tax relief.

The reduction in additional property taxes and the reintroduction of tax relief on energy efficiency improvements.

The organisation also wants to see a reduction in CGT thresholds and for governments to not introduce rent controls.

Share This Article

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now