RLA Chairman Alan Ward has written to the Chancellor George Osborne to voice the ‘serious concerns’ the Association has about tax change proposals and has asked the Chancellor to ‘pause’ these for further evaluation to be carried out on potential consequences.
The letter, which you can read in full here, is a part of on-going campaign that the RLA is running in response to Summer taxation budget proposals.
Based on our knowledge and experience of the private rented sector (PRS), the proposals will –
- Lead to upward pressures on rents, particularly in areas of most demand for private rented properties
- Dissuade landlords from investing in purchasing properties to let which in turn will exacerbate difficulties for tenants in finding properties to rent
- Lead to significantly reduced investment in repair, renovation, and improvements to rental properties causing lower standards. As a result there will be less economic activity which in turn will adversely affect receipts for the Treasury.
In the letter Alan has two suggestions to lessen the impact of proposals:
- The measure should be re-cast so that the right of deduction is retained even if interest is only relieved on a basic rate.
This would mean that the landlord would only be taxed at the same rate as is applicable to their true profits i.e. as if the interest paid was still deducted.
- The measure should only be applied to new fresh borrowings i.e. increased borrowings and not re-mortgages to replace current debt.
This would mitigate our concerns about disruption to the sector as it would not affect current borrowings.
Alan argues that with the extensive duties and responsibilities placed on landlords that the PRS – for tax purposes – should be treated like any other business. Alan has requested, on behalf of the RLA that the Chancellor allow for a detailed evaluation of proposals before allowing them to come into force in October of this year.
The RLA has created a bespoke tax campaign webpage, complete with a tax calculator, and powerful tools to enable landlords to message their local MP quickly.