Yesterday, we reported on the Residential Landlords Association’s (RLA) concerns that landlord tax changes are not working, but are instead hurting tenants. Today, an ex-Bank of England (BoE) policymaker is reaffirming its fears.
David Miles describes the Government’s recent landlord tax changes as “profoundly wrongheaded” because they will push up costs for tenants.
The Government has attempted to create what the former chancellor, George Osborne, described as a “level playing field” between landlords and homeowners by increasing taxes for buy-to-let investors, such as hiking Stamp Duty costs, reducing mortgage interest tax relief and scrapping the Wear and Tear Allowance.
Miles points out that these landlord tax changes have left many investors with little alternative but to pass costs onto their tenants by increasing rents.
The economist, who is now a professor of financial economics at Imperial College London, fears that fewer people will be willing to invest in the buy-to-let sector now as a consequence of the Government’s landlord tax changes, which will have a detrimental impact on housing supply in the private rental sector.
At an event hosted by New City Agenda, Miles explained: “I think these measures were introduced in order to try to help make housing more affordable for people who want to buy them; I think they are almost certainly wrongheaded.
“I suspect that they will have a negative impact on the ability of young people to become homeowners, because those people are in the rented sector already.”
He added: “Making rental property more expensive, as is very likely if you reduce the attractiveness to suppliers of rented property, if a side effect of that is to make rents even higher, it is very hard to see that as helping the people who you are trying to help become homeowners.”
Do Miles’ comments ring true with you? For instance, have you put your rents up as a result of the tax changes, and have you been discouraged from investing further in the sector?