Campaigning association calls for buy to let change in March Budget
A campaigning landlord organisation is calling for UK Chancellor Philip Hammond to scrap planned changes to taxation for the buy to let sector in his forthcoming March Budget.
The Residential Landlords Association (RLA) said that the UK should follow the example of Ireland by scrapping planned changes to mortgage interest relief or, at the very least, applying it only to new borrowing for new purchases in the sector.
It comes as new figures reveal that buy to let purchases fell by 63% last year and landlords are also concerned that as well as the tax relief changes due to start in April a proposed ban on letting agent fees will also hit the sector with landlords not investing in future portfolios and rents rising.
The Government has committed to boosting the fledgling Build to Rent sector which will see more blocks of apartments aimed at young people who cannot afford to buy or don’t want to buy being built in cities across the UK.
But there was disappointment that the much awaited Housing White Paper, while confirming that more homes to rent are needed, did not seem to address the concerns of landlords in the private rented sector, many of whom own just one property that they let.
The RLA is hoping that a boost will come from the Budget instead for buy to let landlords. It wants the recently imposed extra 3% stamp duty on additional homes to be waived for landlords investing in a new property or refurbishing an empty or converted property that is adding to the housing stock.
It is also calling for the Chancellor to remove the anomaly that means that VAT can be reclaimed on goods and services in connection with the construction of a new dwelling when it is intended for owner occupation, but not when it is constructed to rent out.
The RLA believes that much could be done to encourage landlords and this does not need to be at the detriment of first time buyers. For example, it suggests that landlords wanting out could be encouraged to sell properties to sitting tenants by applying the new 20% rate of Capital Gains Tax in such circumstances, supporting the Government’s home ownership ambitions.
It also suggests a review of the financial capabilities of landlords to meet the new energy efficiency requirements coming into force from 2018 making EPC recommended improvements tax deductible.
‘This is not just a wish list that will benefit landlords and tenants, but one that will benefit the economy as a whole. The Treasury Select Committee warned a year ago that measures taken to curb buy to let would come at a cost to the wider economy, and we would ask the Government to take heed of this,’ said Alan Ward, RLA chairman.
‘The time for change is now and we hope the Government will take the opportunity to grasp the nettle and rethink some of the unfair tax changes set to have devastating impact on private rented sector landlords ahead of the Budget on 08 March,’ he added.