Landlords call for Budget tax breaks to boost supply and control rents
Organisations representing the private rental sector said landlords are facing uncertainty ‘on a number of fronts’ as demand grows.
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Your support makes all the difference.Private sector landlords have called on Rachel Reeves to give them new tax breaks to help keep rents down and boost the supply of homes.
In a letter to the Chancellor ahead of the Budget, representative bodies said their members are facing “uncertainty on a number of fronts” and require stability and clarity to help address the “severe shortage of homes” which has left tenants “struggling”.
Analysis by Rightmove showed average advertised rents have hit a record high amid signs landlords are selling up, with 18% of homes for sale being previously available for rent between July and August.
The letter – signed by the National Residential Landlords Association, Propertymark, Goodlord and Large Agents Representation Group – urged the Government to reconsider the way the sector is taxed as part of the solution.
The bodies cited comments by Paul Johnson, director of the Institute for Fiscal Studies, who said in January that the taxation of rental housing had “become increasingly penal” and was driving up rents.
However, the call for a tax reduction comes as it is understood Ms Reeves is looking to raise up to £40 billion in tax hikes and spending cuts in this month’s Budget as the Government seeks to avoid a return to austerity.
A potential increase in capital gains tax was highlighted in the letter as a concern for landlords.
The letter adds: “Given this and the Government’s efforts to boost economic growth and deliver more housing, and with 82% of private renters in England expressing satisfaction with their accommodation – a higher level than those in the social rented sector, we recommend the following:
“Abolish the 3% stamp duty levy on homes purchased for rental where landlords refurbish any of the over 250,000 long-term empty homes in England. Encouraging owners to sell these properties would also be a practical solution, especially when over 115,000 households are living in temporary accommodation.
“Consider removing the levy for landlords investing in projects that increase the net supply of housing, such as purchasing new-build properties ‘off-plan’ or converting empty shops or offices into decent quality rental accommodation.
We call on the Government to use the Budget and spending review to announce that the local housing allowance will remain pegged to at least the 30th percentile throughout this Parliament. This would provide much needed certainty for both tenants and landlords regarding housing support.
“Furthermore, we call on the Government to use the Budget and spending review to announce that the local housing allowance will remain pegged to at least the 30th percentile throughout this Parliament.
“This would provide much needed certainty for both tenants and landlords regarding housing support.”
The letter said there are now a number of factors placing landlords in a precarious position.
The Renters’ Rights Bill, which will abolish “no-fault” evictions and boost other protections for tenants among a range of measures, is described as “the biggest set of changes the market has seen in over 50 years”.
Landlords also said there is a need for a “clear plan” for the Government’s push to improve the energy efficiency of rented homes and ongoing “uncertainty” over local housing allowance rates, which determine tenants’ benefits.
The organisations welcomed the Government’s efforts to boost housing built specifically for rent, but cautioned against viewing this as “a complete solution to the sector’s challenges”.
They added build-to-rent completion rates had “improved substantially” but are not “keeping pace with the current rate of landlord exits from the wider sector”.
The letter referenced figures from property website Zoopla which showed 1,000 units are completed each month in this market, but sales data suggests that more than 5,000 homes for sale each month were formally rented.
It added: “Build to rent units also tend to be let at a premium compared to the wider private rented sector and a choice of price points must remain available to tenants.
“Data from (estate agent) Hamptons shows that average monthly rents for build-to-rent units are £1,840 – 10% more than similarly high-end properties and over £500 more than the Office for National Statistics’ average rent for the private sector as a whole.”
A Government spokesperson said: “We do not comment on speculation around tax changes outside of fiscal events.”