A think thank has moved to express its fears towards the stamp duty surcharge for buy-to-let landlords.
The TaxPayers’ Alliance, a British pressure group, believes that tenants could end up bearing the cost of the rises. As such, it is calling on the Government to scrap the stamp-duty surcharge, and reconsider cutting mortgage interest tax relief, to prevent rents spiralling.
Landlords acquiring buy-to-let property have fallen since the 3% stamp duty surcharge was brought in during the beginning of April. There are further concerns that mortgage interest tax relief cuts, coming into force in April 2017, will drive more investors away from the sector.
This, it is feared, will drive up rents, due to the lower number of properties available on the market.
A number of landlords will be left with little alternative but to pass their extra costs onto tenants, due to their inability to offset their mortgage interest against tax on rental income.
However, the TaxPayers’ Alliance feels that the Government still has an opportunity to undertake more reforms in order to tackle the housing shortage in Britain.
Tackling the issue
Jonathan Isaby, chief executive of the TaxPayers’ Alliance said, ‘for decades, politicians have failed to tackle the root cause of the housing crisis: a chronic lack of supply. Stamp duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,” he added. “The new Chancellor should now seize the opportunity to drastically simplify and reduce property taxes, while removing planning restrictions which prevent huge swathes of land from being built on for no good reason at all.’
The think tank has gained support from the Residential Landlords’ Association. Chairman Alan Ward said, ‘recent tax changes will see many landlords increase rents. This will make it harder for tenants to save for a deposit for a home of their own. It will go against everything the Government claims it wants.’
‘Ahead of the Autumn Statement there is now an opportunity for the new Government to think again about its tax on new housing,’ Ward added.