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The impact of tax changes for landlords in the Private Rented Sector (PRS) on the availability of affordable housing will be debated in the House of Commons today. Landlords are concerned they could be driven to bankruptcy, leading to a significant reduction in housing supply.
The Scottish Association of Landlords (SAL) has announced their support for an amendment to the Finance Bill submitted by the SNP Shadow Treasury Team at Westminster which would require the UK Government to review the impact of changes to Mortgage Interest Relief (MIR) on the availability of affordable housing.
Changes to MIR will see landlords taxed on their turnover rather than profit and SAL is concerned this could push many landlords into a higher income tax bracket despite their income not having increased.
SAL is also concerned this could reduce the willingness of landlords to upgrade properties or invest in new homes. It is possible that the tax due in many cases could be higher than the landlord’s actual income, causing their businesses to go bankrupt, significantly reducing the number of homes available for rent and forcing an increase in rent levels. This would disproportionately affect the supply of affordable housing in the PRS.
The new clause to the Finance Bill will be debated at Westminster during the Report Stage of the Finance Bill this afternoon.
John Blackwood, Chief Executive of the Scottish Association of Landlords, said: “The changes to MIR are yet another attack on responsible landlords who provide essential housing across the UK. The changes will mean landlords are taxed on their turnover, unlike every other business in the country which is taxed on profit. This will likely force a large number of landlords to sell, reducing much needed housing supply.”
“The result will be increased costs for landlords and either a reduction in investment, an increase in rents or both. All of this at a time when governments in both London and Edinburgh acknowledge the vital role the PRS has in tackling the current housing crisis. We will work with our members to try and ensure vulnerable people do not suffer. Increased costs will inevitably impact most on those who cannot afford to see bills increase, potentially driving them in to the arms of rogue or criminal landlords who do not meet legal standards on safety or tenant security. ”
“We welcome the amendment by Roger Mullin MP and urge the UK Government to accept it. Delaying the implementation of the MIR change until the study is complete will ensure that there is firm evidence available as to the likely impact it will have on the most vulnerable in our society.”
The amendment to the Finance Bill would compel the Chancellor to review the impact of the Mortgage Interest Relief (MIR)changes in Section 24 of the Finance (No. 2) Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act. It has been tabled by Roger Mullin MP (SNP, Kirkcaldy and Cowdenbeath – Treasury Spokesperson), with the support of Kirsty Blackman MP (SNP, Aberdeen North) and Philip Boswell MP (SNP, Coatbridge, Chryston and Bellshill)
The full amendment:
“New Clause 18 reads:
“Impact of section 24 of Finance (No 2) Act 2015 on availability of affordable housing
The Chancellor of the Exchequer must commission a review of the impact of changes relating to income tax made by Section 24 of the Finance Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act.”
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