New research from the Residential Landlords Association
(RLA) has undermined the Government’s case that changes to the way landlords
are taxed will not increase rents.
Interim findings from a survey
of landlords by the RLA has found that 65% are now considering increasing rents
as a direct result of the budget.
The chancellor announced
earlier this month that mortgage interest relief for residential landlords
would be restricted to the basic rate of income tax.
Also landlords will no longer
be entitled to an automatic entitlement to a wear and tear allowance for their
properties, leaving them with no recompense for general wear and tear of a
property.
The RLA’s findings undermine
HM Revenue and Customs’ assessment that these measures will have no significant
impact on rent levels and it argued that the basis of the budget assumptions is
wrong.
George Osborne had argued that
landlordsare taxed more favourably than home owners but both the Institute for
Fiscal Studies and think tank Policy Exchange have warned that this is not
correct. Unlike home owners, landlords are taxed on rental income and capital
gains.
RLA chairman Alan Ward said:
“The reality is that the chancellor’s belief that rental property is taxed more
favourably than home owners is simply not correct.
“Rather than supporting the
sector to provide the vital homes needed to support a flexible labour market,
today’s Finance Bill will choke off supply and drive up rents.
“The belief that landlords
should be compared to home owners is like comparing apples with pears. The two
are vastly different. It’s time the Treasury recognised residential landlords
as a business.”
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