Landlords have understandably felt for some time that the changes introduced into private sector legislation have been attacks on them. Still known as ‘Rogue landlords’, the majority of good landlords are tarred with the same brush as those whose only concern is money and make no effort to improve their properties to a decent standard.
Well, finally, a Conservative politician has spoken out for landlords, saying ‘Why are we clobbering people who provide homes to rent?’ An article written by David Jones, former Welsh Secretary and Conservative MP for Clwyd West for the Conservative home online magazine was very clear – the Government may support home-ownership, but far more houses are needed for those unable to buy or who make a conscious decision to rent in the private sector.
The MP de-bunks the myth that landlords are taxed more favourably than home-owners, quoting no lesser authority than the Institute for Fiscal Studies who have said ; The tax system is not, and was not, even before the recent changes, more generous to people buying to let’. That being the case, it is not surprising that the recent changes in the tax system have been so unpopular with landlords.
The restriction of mortgage interest relief to the basic rate of income tax and the three per cent levy on stamp duty for homes to rent purchases will raise more tax – but is likely to mean landlords have to raise rents in an effort to recoup their costs (which will hit tenants and, for the benefit dependent, the public purse) and could deter them from investing in the properties they have or from increasing their portfolios (when more properties are needed if Savills predictions of needing 1 million new rental homes are needed by 2021).
In a survey conducted by the Residential Landlords Association following the budget in March this year, 78% of landlords surveyed admitted that the tax changes would deter them from further investment in more properties.
He also hits out at the Treasury, who have argued that part of the problem for the aspiring first-time home-owner is that they compete with the private landlord for the same properties. There is no evidence to suggest this is anything other than a story designed to place landlords in the wrong (again!).
David Jones does not only criticise current policies, he does actually pose some solutions.
- Landlords prepared to sell their properties to a sitting tenant should have the 20 per cent Capital Gains Tax applied. This would encourage sales and increase the supply of properties for sale.
- Landlords should be exempted from the extra stamp duty levy when their purchases increase the net supply of housing – if this happened, 39% of landlords have stated they would invest in new build rented housing.
- The Government needs to take action on mortgage interest charges which is basically unfair. A survey of nearly 1,200 landlords, over 60% of those paying basic rate tax would be pushed into a higher rate tax bracket, because tax would now be paid on turnover rather than profit so would need to pay more, even though the actual income has not increased.
To end, I’ll leave it to Mr. Jones and hope his colleagues in Parliament read the article and take on-board his comments. ‘As a party, we should ask ourselves why we are clobbering a group of people who, having been hit by Gordon Brown’s pension credit reforms, decided to invest in property as a way of providing financial security for themselves and their families’.
Well said that man!
For advice on buy to let issues – Ask Sharon