A council claims that up to 13,000 private landlords are “of interest” to HM Revenue and Customs, where there are alleged discrepancies between council records and income declared to the tax authorities.
Newham council says the 13,000 represent almost half of all the landlords in the borough and the figure has been calculated through analysis of the authority’s private rental sector licensing scheme, which is widely regarded as one of the most comprehensive in the country.
Newham has been working with HMRC and through the data collected by its licensing regime has been able to assist HMRC in assessing tax compliance by landlords.
Research previously conducted by Newham, which was independently evaluated by the Institute for Public Policy Research, suggested that the amount of undeclared tax by landlords in London back in 2014 could be as much as £183.1m.
Newham Mayor, Sir Robin Wales, says: “In addition to uncovering large scale exploitation of vulnerable tenants, our licensing scheme has also unearthed that many unscrupulous landlords may be benefiting from undeclared tax.
“At a time when local authorities are experiencing savage cuts and Newham alone has had half its grant funding cut; possible tax evasion on this scale takes money from vital public services. This is money out of the pockets of our poorest residents who rely on our services the most”
“While the Chancellor is scrambling around ahead of his Autumn Budget and the Prime Minister is claiming there is ‘no Magic Money Tree’, Newham has the solution in private rented licensing.“
Newham was the first authority in the country to introduce borough-wide licensing in 2013, which requires all landlords to licence all property offered for private rent.
Over the last five years the council has instigated 1,135 prosecutions for housing crimes, banned 28 of the worst landlords from operating in the borough, recovered over £2.6m a year in additional council tax and served 2,170 notices to improve housing conditions and management.
Newham has 26,254 landlords registered as holding a property licences or licenses and wants to continue its scheme - although requires government agreement to do so.
A decision is expected from the Department of Communities and Local Government next month.