Generation Rent, the tenant lobby group, has spoken out in support of new tax changes for landlords.
The comment arrives following a call from the Royal Institution of Chartered Surveyors (RICS) to scrap the additional Stamp Duty charge on second homes and two landlords’ fight in court to repeal the forthcoming mortgage interest tax relief reduction.
Tenant Group Supports New Tax Changes for Landlords
Disappointingly for property investors, the landlords lost their challenge on Thursday. This means that if all goes to plan, the amount of tax relief that landlords can claim on mortgage interest will be cut to the basic rate from April 2017. The Government has provided a guide on how the change will affect you: /government-guide-tax-relief-changes-residential-landlords/
However, the Director of Generation Rent, Betsy Dillner, believes that the tax system has favoured landlords for too long, and the new tax changes should help first time buyers get onto the property ladder.
“For too long, the tax system has favoured people who bought homes to make a profit over people who just wanted somewhere to live,” she insists. “The Government’s recent tax changes should help to dampen speculation and give an advantage to people who have to date been shut out of the housing market.”
She continues: “These are long-term measures whose success depends on house prices slowing down. Warnings about the impact on the overall supply of private rented housing are premature, and clouded by the result of the EU referendum.
“Despite the prospect of mortgage interest tax relief being phased out for landlords paying the higher rate of income tax, the number of purchases with a buy-to-let mortgage increased by 14% in the 12 months since George Osborne announced the policy in July 2015.
“And despite the introduction of the surcharge in April, and the subsequent dip in sales to landlords, Stamp Duty receipts increased in the second quarter of the year, from £1.75 billion to £1.98 billion.”
She concludes: “As important as it is to dismantle the damaging culture of property speculation, tax is only one part of the solution to the housing crisis. We need to build more homes for low-income households, and the tax reforms mean there’s a new source of revenue for this. We also need to improve protections for tenants whose lack of rights mean they face a high risk of eviction.”
Despite Generation Rent’s beliefs, industry professionals have supported RICS’s calls, claiming that the new tax changes for landlords will hinder investment in the private rental sector, and thus make rental accommodation more expensive for tenants.
Additionally, the Residential Landlords Association warns that tenants will face rent rises as a result of the new taxes.