Home Business Time For A Change On Landlord Tax Laws?

Time For A Change On Landlord Tax Laws?


The private rental sector has been under intense scrutiny in recent years, and landlords have been dealt a number of blows, which is why they now seem to be fighting back.

The rental market has been booming for some time, but bringing in increased stamp duty and tougher mortgage availability coupled with the phasing out of the mortgage tax relief has meant many landlords are now questioning whether buy-to-let investment is really worth it. With a vast number now seeing their profits being eaten away, and others deciding entering the rental market now has too many barriers, it is no wonder that many are calling for change.

The Private Rental Market

The rental market grew at a rapid rate because those who could afford to invest in property ended up supplying homes to those who could not. Stricter mortgage rules have meant that it is now harder and harder for many people to get onto the property ladder, driving them into rental property either to allow them to save up for their own home or to enjoy a better lifestyle than those saving for hefty deposits.

Recent studies estimate that there could be a net loss of 133,000 homes for rent across the UK over the next 12 months. With landlords feeling squeezed out of the sector there could be fewer homes for rent in a property market that first time buyers still struggle to enter. The Government has been trying to boost the supply of homes to rent by corporate investors, but small businesses and individual landlords are not feeling the benefit.

Potential Tax Changes

This loss of rental property comes at a time when 84% of landlords are reporting an 84% increase or stability in demand. This leaves a massive gap between supply and demand, which has led to the Residential Landlords Association (RLA) to demand that the Government ends its tax on new homes where landlords are investing in the property.

The RLA feel that converted offices and shops, the transformation of large homes into several smaller units or the return to use of empty dwellings should also fall under this umbrella. They feel that corporate investors, who are estimated to only make up 2% of private rented homes, are failing to provide the properties that are needed, both in terms of volume and speed.

With private landlords providing affordable housing on a long-term scale, they are seen to be supporting local economies and should therefore be encouraged rather than put off by ever-increasing taxation.

Whether the Government listens to these concerns remains to be seen, as they seem to be intent on encouraging the corporate side of the market more and more. However, it is clear that there is still a place for the private landlord, but many will have a lot of sums to do to decide whether it is worth continuing.

For more information on property investment in the UK in the buy-to-let or student property investment markets, please contact Hopwood House.

Claire James