The RLA is challenging the Government on the way landlords are taxed in its Autumn Statement 2016 submission – asking for greater support for the PRS.
The association has asked the Treasury to look at the issue of housing as a whole, rather than concentrating all its efforts on home ownership.
PRS landlords are providing vital homes to let at a time when demand is higher than ever – and in its submission the RLA asks new Chancellor Philip Hammond to rethink the controversial tax changes introduced by George Osborne.
RLA members have already met with Treasury officials to discuss a number of ways in which ease the tax burden on landlords and increase supply.
- Removing the anomaly that means that VAT can be reclaimed on goods and services in connection with the construction of a new home for owner occupation but not when it is constructed to rent out.
- Scrapping the new three percentage point stamp duty levy where a landlord is investing in a new property or refurbishing an empty or converted home that is adding to the housing stock.
- Encouraging local authorities and public bodies such as the Ministry of Defence and the NHS to identify and sell off small plots of unused public sector and local authority controlled land for development by the PRS.
To support the Government’s home ownership ambitions, landlords could also be encouraged to sell properties to sitting tenants by applying the new 20% rate of Capital Gains Tax in such circumstances.
Changes to mortgage interest relief should also only apply to new borrowing when the changes begin to be phased in from 2017.
The association is also asking for a review into the financial implications of the new energy efficiency requirements coming into force from 2018, following the end of the Green Deal.
David Smith, policy director for the RLA said: “We have had a productive meeting with the Treasury and the point was made that there is a new team of people in place, which we hope means the new Chancellor is open to rethinking some of the unfair tax changes brought in by George Osborne.
“Along with our submission to the Autumn Statement we gave the treasury a copy of the RLA’s Landlord, Investment, Finance and Tax Report 2016 to back up our arguments with sector research coming directly from landlords themselves.
“We are hopeful they may find alternative ways to stimulate the sector and take on board our comments about looking at housing more generally rather than concentrating solely on home buying.”
Ahead of the Autumn statement the RLA carried out a survey of landlords asking them about recent tax changes. A total of 2,883 landlords responded to with 66% saying they won’t be buying any further homes for their portfolio.
A total of 70% said budget changes announced in 2015/16 will negatively impact on their income and just under a third, 31% of landlords are thinking of leaving the sector altogether. More than half, 58% are considering reducing their investment because of the changes.
A total of 66% say they will put up rents to offset the impact of the tax changes.
To read the full submission click here.