Property News > Landlord group calls for tax change for private rented sector homes

Landlord group calls for tax change for private rented sector homes

The UK faces a net loss of 133,000 homes for rent over the next 12 months, as research suggests that the tax system for landlords in the private rented sector needs to be re-evaluated.The research, produced by Pearl, the research arm of the Residential Lettings Association (RLA), shows that many landlords are leaving the sector as a result of the phasing out of mortgage tax relief and the implementation of an extra 3% stamp duty on second homes.Between March 2016 and March 2017, there was a loss of 46,000 private rented homes, according to the Government’s own figures, the research points out. There is strong evidence to suggest that the demand for private rented property is on the rise, with 84% of landlords suggesting tenant demand has either increased or remained the same, and this was supported by figures provided by the Association of Residential Letting Agents (ARLA). The decision to add a 3% levy on stamp duty for those buying multiple properties, coupled with the restriction of mortgage interest relief to the basic rate of income tax are the main reasons for the fall in supply, according to the Pearl report. Analysis by the RLA suggests that just 2% of all private rented households in the UK are developed by corporate investors - a number which the Government is seeking to boost. Currently, the majority of landlords are individuals and small businesses. The RLA are calling for the Government to scrap its tax on new homes, arguing that this is deterring landlords from investing in property and boosting the overall housing supply. This would include making any of the estimated 605,000 empty dwellings habitable, as well as converting empty offices and shops into new homes. ‘The demand for private rental homes shows no signs of slowing up, despite efforts to encourage home ownership. The Government was always mistaken to place homes to own and to rent in opposition to each other rather than seeking to supply more homes in all tenures,’ said David Smith, RLA policy director.‘Corporate investors are failing to provide the new homes to rent at the pace and scale we need. They are also poorly equipped to meet the housing needs of towns and rural areas. The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies,’ he pointed out.‘We need to support and encourage them to provide the long term homes to rent needed. The Government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent,’ he added.

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