Paragon, a specialist mortgage lender, has urged Chancellor George Osborne to make no further changes to landlord taxes in the Budget 2016, which will be released today.
The firm also suggests that a full review of the UK’s housing requirements is conducted.
The UK’s population is predicted to grow from 64.6m in 2014 to 74.3m in 2039. But Paragon notes that with limited house building, reduced investment in social housing and a range of tax changes for private landlords, there is little prospect that quality, affordable housing will be available for all without directional action from the Government.
Paragon Urges Chancellor to Make No Further Changes to Landlord Taxes in Budget 2016
While homeownership is the aspiration of many, private landlords are increasingly housing the UK’s young adults that either cannot or choose not to buy, either because of mortgage affordability and strict criteria, or lifestyle changes and a requirement for flexibility.
It is believed that in 30 years’ time, 30% of all households in the UK will rent from private landlords.
So far, Government initiatives to encourage homeownership have been counteracted by reduced investment in local authority housing, a lack of support for housing associations through the Right to Buy scheme, and a complicated string of tax and policy changes for private landlords.
A leading financial expert explains the forthcoming, planned changes: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/
The dangers of these changes are highlighted in an independent London School of Economics report, commissioned by Paragon, which argues that the private rental sector plays a key role in the UK’s housing system, and that any slowdown in private rental housing supply, as a result of changes in taxes and regulation, will put pressure on rent prices and household budgets.
The Chief Executive of Paragon Group, Nigel Terrington, insists: “The Government needs to instigate a thorough review of UK housing need in the context of the expected population growth. The size of forecast population growth is the equivalent of nine cities the size of Birmingham.
“The private rented sector is an important provider of homes for people in the UK. For many years, successive governments have actively reduced the provision of social housing. This, together with other regulatory changes, such as the Mortgage Market Review, which has restricted mortgage credit to homebuyers, means more people are turning to the PRS [private rental sector].”
He continues: “There is real risk of lasting damage to the sector if the impact of the changes is not fully understood, and particularly if the Government continues to layer one measure upon another without a thorough and robust assessment of the progressive impact different measures will have.
“The PRS does not have a binary relationship with homeownership; holding back growth in the number of properties for rent will simply not increase homeownership and may increase costs and reduce amenity for tenants.
“In the context of forecast population growth, together with a current and projected housing shortage, the key requirement is for the Government to create a stable policy framework that will encourage investment in the supply of good quality, affordable housing across all tenures, so that people can choose the best housing option to suit their lifestyle.”1
Chancellor George Osborne will present the Budget 2016 at 12:30pm today.
1 http://www.mortgagefinancegazette.com/latest-news/paragon-calls-for-housing-review-and-no-more-tax-on-landlords/