It is inevitable that when tax increases are introduced, some will be affected more heavily than others. In the case of the recent rises that the Government has enforced, tenants in the private rental sector (PRS) have been hit especially hard.
The Residential Landlords Association (RLA) has warned that tenants in the PRS are in fact bearing the brunt of these tax increases. Its research shows that the supply of homes available to rent has begun to dry up, despite there still being a strong demand.
The Royal Institution of Chartered Surveyors released data yesterday, highlighting that, whilst demand for rented housing from tenants “held more or less steady… for the third month running”, the number of landlord instructions “declined once again, rounding off a year in which they have fallen in all twelve months”.
Could this be due to the Government’s tax rises on the sector? The RLA certainly believes that it is to blame for the difficulties that tenants have been experiencing, when it comes to accessing suitable housing within the PRS. This is also taking into account restrictions of mortgage interest relief for the sector to the basic rate of income tax, as well as a stamp duty levy that penalises the development of new homes to rent. This is despite the Chartered Institute of Housing recently noting that “tax reliefs deliver a much bigger benefit to home-owners than they do for private landlords.”
RLA Policy Manager John Stewart has commented: “Whilst the Treasury seeks to dampen investment in rented housing, demand from tenants shows no signs of slowing down. Recent tax rises have served only to make the housing crisis worse.
“Rather than seeing it as a problem to be managed, the Treasury needs to develop a series of pro-growth tax measures that support and encourage the majority of good and decent landlords to provide the new homes to rent we desperately need. Otherwise tenants will find it increasingly difficult to find suitable homes to rent at affordable prices”.