Berkeley Group Blames Tax Increases for Limited Housebuilding

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Berkeley Group, a major UK house builder, has partly blamed the recent tax increases forced upon private property investors as a key reason that it is not increasing its housebuilding in the near future, according to the Residential Landlords Association.

The Residential Landlords Association (RLA) has claimed that the Berkeley Group, in a recent trading statement, has claimed that there has been a fall in demand from domestic buy to let landlords. This was one of a number of reasons that it would be impossible to boost housing supply beyond pre-agreed plans.

A key factor inhibiting the growth in the number of private landlords investing was claimed to be the decision to restrict mortgage interest relief to the basic rate of income tax. The three per cent stamp duty surcharge on the purchase of new rental properties was also cited as an issue.

Berkeley Group spoke out about the importance of supporting private landlords. This is due to the fact that landlords ‘buy early in the cycle and provide security of cash flow to enable complex, capital intensive developments to be brought forward.’

The Residential Landlord Association recently published findings from it’s research exchange, PEARL. They discovered that of the nearly 3,300 landlords responding to its survey, 69 per cent had stated that the stamp duty levy, introduced in 2016, is prohibiting them from expanding their portfolios by investing in further rental property.

Policy director for the RLA, David Smith, said: ‘We have long warned the government of the dangers of its tax raid on the private rented sector. Now we see its impact, with investment in new homes slowing and house builders not confident to up their levels of house building. Rather than taxing new homes, it is time for smarter, pro-growth taxation that recognises the rental market as a crucial part of addressing the housing crisis.’

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