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Government discriminating against UK investment in housing, says RLA

Sally Walmsley
Written by Sally Walmsley

Government policies are discriminating against UK based investment in the housing market by making it easier for foreign investors to purchase properties.
This allegation has been made by the Residential Landlords Association (RLA) in its submission to the Treasury ahead of the Budget in March.

Government policies are discriminating against UK based investment in the housing market by making it easier for foreign investors to purchase properties.

This allegation has been made by the Residential Landlords Association (RLA) in its submission to the Treasury ahead of the Budget in March.

In the Autumn Statement it was announced that a 3 percentage point levy would be added to Stamp Duty for the purchase of buy to let property, except where 15 or more properties are being purchased at once.

As the vast majority of investment in UK rental housing has been made by small landlords owning just a handful of properties to rent, this measure discriminates against them in favour of larger investors, many of whom are likely to be from overseas.

The RLA is calling for all new build properties contributing to a net increase in the housing stock to be exempt from the stamp duty levy.  A survey of over 1,100 landlords by the RLA found that 30% would be more likely to buy new properties if this were the case.

With the Office for Budget Responsibility uncertain about the likely impact of the Stamp Duty changes, the RLA is calling for the Government to give more time to consider the implications of the policy given the potential ramifications on housing supply and rent levels.

Ministers have indicated that the policy will be implemented from the 1st April despite the consultation having not yet been concluded.

RLA Chairman, Alan Ward said: “It is astonishing that a Conservative Chancellor is leaving the way open for foreign investors and cutting opportunities for individual UK landlords.

“This additional assault on private landlords coming on top of changes to the taxation of rental income will only lead to reduced supply and higher rents

“The Chancellor’s planned changes to Stamp Duty came as a bolt out of the blue. Regardless of the Government’s plans for home ownership, demand for rented housing is only set to increase.

“The Government needs to understand that not everyone will be able to afford to buy a house or indeed want to, even if more houses are built. Its whole policy towards the private rented sector needs to change. If it does not, it will only make the housing crisis worse.”

The RLA is also taking advice over whether the Government’s changes to mortgage interest relief, announced in the 2015 Summer Budget, are a breach of the Human Rights Act and European Union Law on free movement of capital.

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About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Media and Communications Officer for the RLA. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

10 Comments

  • In Grenada if a foreigner wishes to purchase a property,
    firstly they need to apply and pay for an Alien Landholder’s licence,
    secondly the Stamp duty is 10% going into a purchase and 15% on sale.
    Thirdly, foreigners are only permitted to own one property.

    If our Government followed these guidelines from an erstwhile colony which uses English Law to this day, they would have more than enough money.

    They would regulate the number of properties foreigners owned in the UK and in London, largely leave empty for the greater part of the year. (No. 1 Hyde Park being a good example)

    Finally, it would hopefully stop them persecuting Landlords, ,particularly small landlords who are diligent, conscienscious, and fed up with all the red tape.
    The large landlords with lots of properties will largely escape the legislation and unless they employ an army of staff I fail to see how they can properly manage large numbers of BTLs in their portfolio fairly or effectively for the good of the tenant without cutting corners.

  • Finally, it would hopefully stop them persecuting Landlords, ,particularly small landlords who are diligent, conscienscious, and fed up with all the red tape.
    The large landlords with lots of properties will largely escape the legislation and unless they employ an army of staff I fail to see how they can properly manage large numbers of BTLs in their portfolio fairly or effectively for the good of the tenant without cutting corners.

  • It’s good to see the RLA criticise the government’s tax policy on rented housing.

    It is more than apparent there appears to be a very serious lack of understanding from government of the market for rented accommodation. Their budget proposals are not only unfair and discriminatory to private landlords (and in particular UK landlords) but they will also cause both a reduction in supply with consequent rent increases and make it it so much more difficult for would-be renters to find accommodation. There is already a shortage of supply and this policy will exacerbate that shortage. Difficult to believe from a Conservative party.

    Whilst no doubt this is not the intention, it will certainly be the consequence of such an inadequate and, I have to say, poorly thought-through policy.

    I hope the government can be persuaded to reconsider before it is too late.

    • It was originally if you had 15 or more properties, but the consultation is now saying it will apply if you buy 15 or more properties in a single transaction.
      Admin

  • Dear RLA,

    I buy property in need of refurbishment every 9 months or so. Once refurbished I either sell these on or rent them out. At what point in the buy and sell cycle will the Government’s proposed changes be implimented? Will the tax be due only if I rent out rather than selling the property or will the tax be imposed on anyone with more than one property? Or will the tax be demanded upon purchase and then refunded upon the sale, and if that is the case will I be required to turn around a project within a certain time period, or will I be expected to hold the property for a certain length of time? Or as I suspect, will this be a ‘watch this space’ scenario?

    I’ve not seen a detailed document laying down exactly what the Government are proposing as yet – unless you know otherwise and can point me in the direction of the said document?!

    Many thanks in anticipation!

  • I found the stamp duty changes incredible. How can it be legal to discriminate against small private landlords vs big corporate investors or foreign oligarchs. Either all should pay the new duty levels or none.

    If I was a tenant I know I would prefer my landlord to be a UK based individual not some overseas ‘company’ . This will drive up rents and more than likely drive down standards in our rented housing stock.

    It is astonishing that a Tory govt is willing to hand over the UK’s residential housing to be controlled by foreigners. Perhaps shows we were right all along, they really would sell their granny if the price was right.

  • I am a landlord with three rental properties, each with a buy-to-let mortgage.
    I am dismayed that our misguided Chancellor appears to detest landlords and undervalue the considerable contribution that they currently make to the UK housing market and the economy as a whole.
    Every other business in the UK is allowed to offset its legitimate business expenses, including the interest on its business loans, against its tax liabilities. It is grossly unfair and outrageous that the Chancellor is discriminating against landlords by removing their right to offset the interest on their buy-to-let mortgages against their tax liabilities. There are, after all, legitimate business loans.
    Similarly, he has discriminated against landlords by imposing a 3% increase in stamp duty upon them but not on any other sector of the property market.
    Such blatant discrimination should be challenged through the courts of the land or those in Europe.

  • The Government, in common with its predecessor Governments, is failing to address the shortage of supply, and through its (well intentioned) financial support for first time buyers encouraging further price inflation at the lower end of the market – more money to first time buyers simply means they an increase their bid and enhance the profits of builders of property for first time buyers.
    The planning system has consistently acted to restrict the availability of land for residential development, and encouraged scarcity pricing.
    Attempts to discourage landlords owning only a few properties will not result in more or cheaper homes being available for first time buyers. Compulsory registration and other measures will only further encourage more landlords to act outside the law, as enforcement of the already adequate existing regulation of the sector is not being carried out by the responsible authorities. What is needed is the enforcement of existing legislation and regulations not additional ones designed solely to attract more votes from a largely ignorant electorate who depend on sensational journalism for their opinions.

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