The Stamp Duty of 3% should be scrapped, and planned changes to mortgage interest relief should also be abandoned, according to UK landlords group, the Residential Landlords Association (RLA). They have called for these items to be scrapped, or at least for the mortgage interest relief to only be applied to new borrowing for a buy to let investment.
The plea to the government has come as they are due to reveal the Budget in March and thus there is just enough time for a review of their tax reforms before they commit themselves. The main reasoning behind the call from landlords is that the costs of these government measures will ultimately be passed on to the tenants themselves through higher rents.
Stamp Duty and Mortgage Interest Relief Changes to Reduce Supply
The Chairman of the RLA, Alan Ward, spoke at length about the issues that are currently concerning the UK’s landlords. He said:
“At a time when increasing numbers of people rely on the rented sector, which will account for 25% of all housing by 2025 according to forecasts, this will only reduce the growth in supply, driving up the cost of rents. Retrospective taxation cannot be right. This is in effect a tax on new homes which is nonsensical when more homes, of all types, are desperately needed. Instead this levy should not be applied where landlords are investing in housing which adds to the overall number of homes available.”
Mr Ward also had ideas about how to help tenants progress to being homeowners themselves. He continued:
“Help could also be given to tenants wishing to buy by applying the new lower 20% rate of capital gains tax where a landlord sells a property to an occupying tenant. The Budget provides an important opportunity to support a thriving rental market that is good for tenants, good for the economy, and good for treasury revenue.”
Only the UK Government Believes in Such Taxes
Similar countries to the UK that the Residential Landlords Association has examined for a comparison include Germany, Australia and the United States. Of these, Mr Ward said:
“The list goes on, but the point is that no other comparable country has a tax system that is so hostile to private rented housing provision.”
Mr Ward’s plea to the government also focused on those poorer tenants who will struggle to manage if their rents are increased in response to the taxes. Referring to the term ‘JAMs’ which stands for Just About Managing, Mr Ward said:
“These tax changes will inevitably place upwards pressure on market rents that can only make life more difficult for the Prime Minister’s so-called JAMs, those who are just about managing, and those tenants wanting to save for a deposit.”
He concluded:
“If we are to secure the new homes to rent we need, the Chancellor Philip Hammond in his forthcoming Budget should get behind the majority of good individuals that make up the country’s landlord population and who supply the overwhelming majority of rented housing.”
