The Government has been urged to abolish tax hikes for landlords and scrap Stamp Duty altogether in order to solve the housing crisis.
These calls come from the influential TaxPayers’ Alliance, which also demands that the Government scraps its forthcoming reduction on mortgage interest tax relief for landlords.
The organisation has issued a report into how taxes on landlords end up hitting tenants, which is further stoking the housing crisis.
It insists that the Government must undertake “real reform” to solve the UK’s housing crisis, claiming that previous measures have only worsened the situation and driven up house prices.
The TaxPayers’ Alliance believes that taxing landlords is in reality taxing tenants, as rents are rising as a result.
The report states that Stamp Duty should first be halved and then completely abolished, describing it as an “unfair tax which stops people from buying their own home, settling down with a family, moving for work or downsizing. It makes the dream of homeownership ever more distant for millions of families”.
It adds: “Stamp Duty is a disastrous and unfair tax which leads to the misallocation of housing stock and leads to lower incomes and higher unemployment than necessary. It doesn’t even raise much revenue, once dynamic effects are fully accounted for.”
The group would also like to see the Government abolish it’s recent 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers, which was designed to discourage excessive property investment and open up housing stock to first time buyers.
In other parts of the hard-hitting report, the TaxPayers’ Alliance criticises local authority landlord licensing schemes, believing that they hit tenants in the pocket.
Additionally, it calls for the “urgent” relaxing of planning laws, including the declassification of some greenbelt land. It believes that declassifying 5% of the greenbelt around London would allow it to expand by almost a sixth.
The Chief Executive of the TaxPayers’ Alliance, Jonathan Isaby, states: “For decades, politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply.
“What’s more, Stamp Duty is still punitively high, and gimmicky tweaks to the tax system will ultimately end of penalising tenants and increasing rents.”
He adds: “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.”
With many landlords forced to put up rent prices as a result of the tax hikes, be aware that some tenants could start to struggle with their finances. If your tenants fall into rent arrears, you could begin to face challenges yourself.
Always protect your rental income against your tenants defaulting on the rent with Rent Guarantee Insurance. Our policy ensures you still get paid and covers your legal expenses for evicting tenants: https://www.justlandlords.co.uk/rentguaranteeinsurance
The full report from the TaxPayers’ Alliance is here: https://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/6572/attachments/original/1469027643/Taxing_tenants_how_taxes_on_landlords_end_up_hitting_tenants.pdf?1469027643