The Government is being urged to rethink punitive PRS tax changes after it was revealed the new stamp duty surcharge raised more than a billion pounds in its first nine months.
It had been predicted the 3% surcharge on the purchase of additional homes, which was introduced in April last year, would bring in an additional £630 million in the first year.
However figures published today by HMRC show that in just nine months the tax had already raised £1.19bn, a massive £560 million more than forecast for the whole year.
If this rate continues, revenue for the year will exceed £1.58 billion, nearly £1 billion more than projected.
In November the Office for Budget Responsibility predicted that in its first four years the extra levy would bring in £3.1 billion more than forecast.
The RLA is now calling on the Government to use this extra revenue from the stamp duty changes to scrap planned reforms to mortgage interest relief, which will, in turn, prevent landlords selling up or having to increase rents.
One RLA survey has found that 58% of landlords are considering reducing investment in their rental properties because of the changes. And 66% feel the tax changes will place upwards pressure on market rents.
At the very least, the RLA believes the Government should pause the start of the introduction, from April, of the mortgage interest changes to enable a better assessment to be undertaken of the likely impact of the policy.
RLA Policy Director, David Smith, said: “In raising nearly twice as much in just nine months as the tax was predicted to make in one year this stamp duty windfall gives the Government a chance to back the rental market and support the development of new homes which we desperately need.
“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first time buyers out of the market.
“It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected.
“The Government has received far more money than it expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.”