Residential property group calls for tax incentives
LSL Property Services, an organization that focuses on the development of Britain’s residential property sector, believes that the country may be heading towards a major housing crisis in the future, unless the government provides landlords with more incentives—such as tax breaks—to actually expand their portfolios. Britain’s population is almost certain to surpass 70 million within 20 years, yet the residential rental sector remains less extensive than in many European countries and government-supported social housing will not be able to cope with the increasing demand for reasonably priced properties. An addition problem is the fact that the government is having difficulties ensuring that mortgages are more reasonably priced, despite the fact that the financial crisis has given London more of a role in the banking sector than ever before.
One way to avoid a potential crisis is for the government to resurrect the Business Expansion Scheme (BES), which was cancelled in 2006. BES, first introduced in 1988, was quite a successful government programme, which used tax breaks to expand the private residential property sector. In fact, the best indication of the scheme’s success was the fact that the country’s available housing stock increased by 41 percent, between 1988 and 2006. LSL Property Services believes that the fact that the scheme was suspended in 2006 contributed to a noticeable drop in residential property constructions. In fact, the government is now struggling to meet its own targets and seems to be failing in this regard. While Prime Minister Gordon Brown’s government aimed for the construction of 240,000 properties, only 87,190 have been completed so far.