The Government’s tax changes for landlords are restricting access to rental homes for vulnerable tenants, warns new research.
Tax Changes Restricting Access to Homes for Vulnerable Tenants
Following yesterday’s Budget that failed to address the housing crisis, the Residential Landlords Association (RLA) is highlighting figures that show that surveyors believe private sector rents will rise by more than 20% over the next five years, severely restricting access to homes for vulnerable tenants.
The forecasts arrive just weeks before changes are introduced that will mean landlords are taxed on their turnover rather than profit, and mortgage interest tax relief will be reduced to the basic rate of Income Tax.
The new research confirms assertions by David Miles, a former member of the Bank of England’s Monetary Policy Committee, that rents will be pushed up by between 20-30% in order for landlords to offset the impact of the measures, alongside the Stamp Duty surcharge on the purchase of investment properties.
Research by both the Council of Mortgage Lenders and Paragon Mortgages has, in recent weeks, suggested that landlords are already raising rents. This echoes concerns first raised by the RLA in its own study conducted shortly after the tax changes were announced.
According to the research released by the Royal Institution of Chartered Surveyors, around one third of those who responded believe vulnerable tenants are finding it more difficult to access rental housing.
Last year, Dame Kate Barker, who authored an independent review of UK housing supply for the Government, issued a warning that the tax changes risked vulnerable tenants losing their homes, “because the buy-to-let landlord no longer finds the yield acceptable or can’t afford it”.
The Policy Director of the RLA, David Smith, responds: “Today’s survey is a reminder that it is tenants who will ultimately suffer as a result of the Government’s punitive tax changes.
“We need a tax system that supports rather than hinders housing growth, but yesterday’s Budget did nothing to achieve this, despite repeated warnings from the RLA and others over the last 18 months that these changes would have negative effects on landlords and tenants.”
He adds: “Even at this late stage, we call on all sides to work with the RLA as it develops its own blueprint for a sector that provides the homes to rent we so desperately need.”