Property management firm, Apropros by D.J. Alexander is urging the government to delay the final phase of the removal of tax relief on borrowing to buy a rented property, as well as asking for a delay to the capital gains tax reduction cut due to come into force on April 6.
Because of the COVID-19 outbreak, the property management firm thinks that the tax changes should be delayed until after the economy has returned to somewhere relatively more normal. They say that the postponement would assist landlords at a time when they may be concerned about the financial viability of their property investment.
David Alexander, Joint Managing Director of Apropos by D.J. Alexander Ltd, said:
“I believe that delaying these tax changes would provide a clear signal of support from the government for the sector which is facing considerable challenges during the coronavirus outbreak. Landlords, whose immediate thoughts are the safety of their tenants, will be concerned about their future in the sector once this crisis is over. Some may even be considering exiting the market so any sign that their investment will be made more viable would be welcome during these difficult times.”
“Indeed, there could be a case for reversing some of the earlier tax cuts introduced by George Osborne which have reduced the viability of the operation of many landlords in the market. While that may seem controversial it would make sense in the medium to long term to ensure that we maintain a strong and financially stable PRS at a time when it is under threat.”
He continued: “My own firm has already been approached by hundreds of property owners in the last fortnight desperate to move their properties from short term to long term letting. The result of this over supply means we may experience an excess of properties available resulting in lower rents and smaller yields.”
“Therefore, any move which can maintain income and profitability in the short to medium term makes sense to ensure the sector is able to continue when the outbreak is over, and the world is returning to normal.”
Alexander added: “Landlords and property owners will understand that they must expect to be in this for the long haul. The government is now saying it will be six months at the earliest before we can return to any sense of normality. But there will clearly be a substantial time beyond that before the market settles. It is likely that property values will be hit in the short to medium term so many landlords and investors will be unwilling or unable to exit at that point so encouragement to remain in the sector remains paramount if we are not to experience a potential shortage in the PRS in the future.”