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Rental tax hikes harming levels of housebuilding

Sally Walmsley
Written by Sally Walmsley

A major house builder has blamed recent tax increases on private landlords as a reason it is not increasing housebuilding.

Berkeley Group said today that a fall in demand by domestic buy-to-let landlords was one of a number of reasons why it would be ‘impossible’ to boost housing supply beyond its current plans.

It cited, in particular, the decision to restrict mortgage interest relief to the basic rate of income tax and the three per cent stamp duty levy on the purchase of new homes to rent out.

It noted the importance of supporting landlords who, it said, “buy early in the cycle and provide security of cash flow to enable complex, capital intensive developments to be brought forward.”

It comes at the end of a week in which the Office for Budget Responsibility warned of “subdued growth in residential investment.”

Recent research by the Residential Landlord Association’s research exchange, PEARL, has found that of the almost 3,300 landlords responding to its survey, 69 per cent said that the stamp duty levy, introduced in 2016, is putting them off investing in further rental property.

David Smith, Policy Director for the RLA, said: “We have long warned the Government of the dangers of its tax raid on the private rented sector.

“Now we see its impact, with investment in new homes slowing and house builders not confident to up their levels of house building.

“Rather than taxing new homes, it is time for smarter, pro-growth taxation that recognises the rental market as a crucial part of addressing the housing crisis.”

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Magazine and Digital Editor for the NRLA. With 20 years’ experience writing for regional and national newspapers and magazines she is responsible for editing our members' magazine 'Property', producing our articles for our news site, the weekly and monthly bulletins and editorial content for our media partners.

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