The chairman of the Residential Landlords’ Association has restated how he sees the private rental sector could help solve the country’s housing crisis.
Alan Ward says George Osborne – the previous Chancellor – put the blame for a fall in housing ownership levels on private landlords who, he claimed, bought properties that would otherwise be available for aspiring home owners.
“That has been denied by the London School of Economics which says ‘only a minority of sales to landlords involved bids from both types of buyer’” says Ward.
He believes landlords are more likely than owner-occupiers to buy properties which are often in a bad condition, to renovate them in areas not appealing to house buyers.
“Despite this, the last government went on a cash-grab by increasing taxes on landlords to deter further growth of the buy to let market. Government needs to back down on its decision to tax landlord’s income and not profit. No other business is taxed on this basis” claims Ward. He says there is now an additional threat that buy to let owners may have to pay up to £5,000 for energy efficiency improvements.
But he believes the core problem is not landlords nor the buy to let concept, but the overall shortage of homes.
“Despite government targets for a million new homes by 2021, based on corporate investment, it is surely short-sighted to ignore the contribution we make as private landlords. In the face of this, the impact of the government’s tax changes will be to deter investment by landlords in new homes to rent” Ward writes on his association’s website.
He says the government should drop the new levy on stamp duty for the purchase of homes to rent where a landlord is adding to the overall net supply of housing.
“Landlords can and do build new homes – but we don’t get the 20 per cent VAT reclaim. We bring empty properties back into use and convert large homes into smaller self-contained units. It cannot be right that the government has a policy that actively discourages the development of new homes by individual landlords” he adds.
He calls for government to cut landlords’ 28 per cent capital gains tax to 20 per cent, in line with other businesses, when a house is sold to a tenant.
He adds that thousands of landlords are ready to develop a few properties each “which would mean a huge boost to supply.”