A prominent lettings agency director says the government needs to realise that higher taxes for landlords mean higher rents for hard-pressed tenants.
Greg Tsuman, director of lettings at Martyn Gerrard Estate Agents, spoke out following the rise in stamp duty on additional homes from 3% to 5%. This was announced in yesterday’s Budget and took effect from midnight.
Tsuman says: “The government needs to join the dots – more taxes on landlords simply means higher rents for those who cannot afford to buy their own home. Rents will increase as a result of this Budget. This Budget will cement the perception that many landlords have that Labour do not want private landlords in the sector. There is no incentive to enter the market now, when we desperately need investment in the rental sector as result of the increase on the additional SDLT to 5%. Meanwhile, the elephant in the room – tax on mortgage interest – continues to be ignored.
“Landlords have been exiting the rental market at the fastest rate since the pandemic. We need to encourage them back, not worsen the exodus. The tax system for landlords is nonsensical and is destroying the rental market. No rational landlord wants to enter the market when they’re paying tax on interest payments and now pay increased stamp duty to purchase. Risks keep increasing and rewards diminishing.
“Perpetually increased taxes won’t bolster the public finances if landlords leave the market altogether. New Zealand is a great case study of what went wrong and how it can be fixed. Landlords could live with increased taxes if they weren’t being taxed on interest payments as well. A higher tax on actual profits rather than one on revenue would end the illogical situation we currently have where many landlords are being effectively taxed on losses.
“Labour had a once in a lifetime opportunity to end the cycle of spiralling rents by taking a commonsense approach to supply and demand and incentivise landlords to put more rental properties on the market. While increased building will help with supply, it will take years to take effect and the market needs action now. Meanwhile, the effects of fixing the tax system for landlords would be felt almost immediately.
“Ultimately, it’s ‘working people’ who will suffer the most from these changes in the form of further rent increases and less choice – affecting over a third of Britons. The rental market has been in trouble for some time now and these measures will only exacerbate the crisis. The reason why London councils are paying as much as £4M a day on temporary housing is because there are simply not enough homes available for working people.
“The increased tax and cost-burden faced by landlords have seen the market in serious decline over the past few years and this Budget is sadly set to maintain that downward trend. Many landlords were exiting the market as they were finding it increasing hard to cover their costs – increasing taxes on them further does nothing to help the working people who will feel this most.”
