Tax hikes on the private rented sector are not only hurting tenants but also failing to achieve their stated objective, according to the Residential Landlords Association. The warning follows the publication of research by the Local Government Association showing that the average private sector rent is now £852 a month across the country, although this figure […]
Tax hikes on the private rented sector are not only hurting tenants but also failing to achieve their stated objective, according to the Residential Landlords Association.
The warning follows the publication of research by the Local Government Association showing that the average private sector rent is now £852 a month across the country, although this figure is skewed by higher London rents.
The RLA said that soaring rents were a reflection of the supply crisis in rental housing and further demonstrates the sharp fall in buy-to-let mortgage applications.
The situation is likely to get worse as landlords feel the squeeze as mortgage interest relief is phased down to the basic rate of income tax.
Research by the RLA has found that just 19% of landlords plan to invest in new property over the next year, with 58% considering reducing further investment in their rental properties due to recent finance changes because of tax increases.
Although ministers have sought to boost the number of homes for private rent by encouraging institutional investment in the sector, the London School of Economics last year said that individual landlords will remain the dominant players in the market.
The RLA is warning that no route can be found to boost the supply of homes for private rent that the country needs without providing support for the majority of landlords who are individuals or small firms.
It is calling for the government to scrap the decision to tax a landlord’s turnover, rather than profit, abandon the mortgage interest relief changes and to no longer apply the stamp duty levy on additional homes where a property is adding to the supply of housing available to rent.
RLA policy director, David Smith, said: “Today’s research from the LGA shows clearly the problem being caused by the government’s tax increases in a softening economy.
“Individual landlords are stalling investment in new property as a result of the changes, whilst institutional investors are failing to come forward to provide the homes to rent we need.
“The Government argued that the tax changes were about supporting first-time buyers. What has happened is that tenants can’t find the homes to rent they need, whilst being unable to afford a home of their own.
“The rental housing tax hikes are simply hurting but not working for anyone. It is time to scrap them.”
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