Sunday, February 25, 2024

Change in tax laws for the UK’s private rented sector demanded by landlord group

Residential Lettings Association (RLA) calls on the Government to change tax laws for the UK’s private rented sector

Taxes on landlords in the UK’s private rented sector need to be re-examined as new research shows that the country faces a net loss of 133,000 homes for rent over the next 12 months, it is suggested.

According to research from Pearl, the research arm of the Residential Lettings Association (RLA), many landlords are leaving the sector as the phasing out of mortgage tax relief and the extra 3% stamp duty on those buying second homes, is affecting many landlords.

It points out that the Government’s own figures show that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.

The research also shows that 84% of landlords have seen tenant demand increasing or remaining stable and this is backed up by figures from the Association of Residential Letting Agents (ARLA) which has also found an increase in demand for private rented homes.

The Pearl report says that much of the reason for the fall in supply has been the decision to restrict mortgage interest relief to the basic rate of income tax and the decision to add a 3% levy on stamp duty for the purchase of additional homes.

Analysis by the RLA suggests that just 2% of all private rented households in the UK are in homes developed by corporate investors. The majority of landlords are individuals and small businesses which it says is unlikely to change much.

To boost the supply of homes to rent the RLA is calling for the Government to end its tax on new homes. It says that the 3% additional homes tax should not be applied where landlords invest in property adding to the overall supply of housing.

RLA policy director, David Smith said the demand for private rental homes shows no signs of slowing up, despite efforts to encourage home ownership. The Government was always mistaken to place homes to own and to rent in opposition to each other rather than seeking to supply more homes in all tenures.

Corporate investors are failing to provide the new homes to rent at the pace and scale needed. They are also poorly equipped to meet the housing needs of towns and rural areas. The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies. There is a need to support and encourage them to provide the long term homes to rent needed.

He added that the Government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent.

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