14^th Nov 2018

The Chancellor, Philip Hammond, has yet again failed to abolish or reduce the onerous tax reforms that his predecessor George Osborne introduced which still continue to plague the buy-to-let sector.

The 3% stamp duty surcharge and the phasing out of the mortgage interest tax relief is having a major affect on British renting households, as the tax measures are causing landlords to increase rents or to leave the sector, thereby reducing numbers of rental properties which will push up prices either way.

Russell Gould, CEO of a marketplace for buying and selling residential investment properties, said: “We are disappointed that once again, private rental property has taken a back seat and the much needed tax breaks to support landlords who provide the nation’s tenants with valuable rental homes have been ignored.”

James Davis, founder and CEO of an online letting’s agency, who is also a landlord, believes that the government has to show landlords “more respect” and should be treated the same as the majority of other business sectors.

He said: “I honestly believe we [landlords] are needed and that, therefore, our future is safe.”

The only mention in Hammond's Budget about the lettings industry was for landlords who share occupancy with their tenants, and again this area was targeted by limiting lettings relief in this area.

Robert Nichols, chief executive of a letting agent's chain said, the measure was “as good as removing it in its entirety."

Nichols said: “Once again, private buy-to-let landlords have to get their heads around another tax change that will leave them worse off in the long run.

“The new restrictions on lettings relief are a further punishment to hard working individuals who have chosen to invest sensibly in residential property.”

Robert Pullen, partner of an accounting, tax and advisory practice, argues that limiting lettings relief on landlord shared occupancy is once again “another tax hit for landlords”.

He said: “The £40k relief on sale will be all scrapped, except for rent-a-room properties.”

Neil Cobbold, of a rental payment management company for agents, thought that the government was going to turn its full attention onto short term lets.

The private rental sector does considerably boost the government's coffers and Cobbold argues that short term lets affect the lettings' industry and he believes that now is “right time for initial regulation”.

Cobbold said: “There has to be an equal tax footing for conventional landlords and those looking to let their homes on a short-term basis, and the proposal for limited tax relief on properties where the owner is in shared occupancy with the tenant marks the very first step towards achieving that.

“Over the next decade, it is likely that the short-term lets market will continue to expand, so it will be interesting to see if the government takes a similar regulatory approach as it has done with standard lets in the private rented sector.”

He also points out that this Budget was a “missed opportunity” and should have included support for landlords offering long term tenancies with better tax breaks.

He continued: “This would have been a welcome move by the government as it would have allowed landlords and tenants who want to pursue longer tenancy agreements to do so without making it a mandatory requirement for the entire PRS.

“Industry research has shown that mandatory longer tenancies may cause some landlords to exit the sector, and that not all tenants are looking for long-term agreements.

“However, for many landlords a capital gains tax break would be a timely incentive to continue to provide much-needed rental housing stock.

“Such a policy could have provided vital feedback to the government’s previously announced plans to introduce mandatory three-year tenancies, indicating whether long-term tenancies are needed or if they should remain an optional decision rewarded with a tax break.”

Cobbold also criticises the government's lack of information on the introduction of the Tenants Fee Bill, which is causing a great concern throughout the industry.

He said: “The ban on upfront fees charged to tenants was first proposed by Chancellor Philip Hammond almost two years ago, along with a cap on security and holding deposits.

“Given the length of time that has passed, it's crucial that letting agents, landlords and tenants get more information about when and how it will be implemented.”

Rory O’Neill, head of residential lettings of an estate agent and property consultants, agreed: “The Chancellor has withheld much-needed support from landlords and tenants who are in a continuous state of flux over changes in fees and tax legislation.

“We would urge the government to explore the correlation between financially squeezed landlords, many of whom struggle to invest in their properties, and tenants struggling to find homes that are fit for purpose.

“In throttling landlords with the removal of taxation relief, many are vacating the market altogether, which is creating a shortage of good quality lettings properties in an affordable price bracket. Not ideal when so many tenants are already crippled by rents and unable to save for a deposit of their own.”


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