One in five private landlords are now less willing to let to young tenants as a result of tax increases being imposed by the Government, according to new research from the Residential Landlords Association (RLA).
With half of 16-34-year-olds now living in the private rental sector, the RLA is warning that young tenants will be hit hardest by the tax changes, as landlords consider moving out of the long-term lettings market.
Since April this year, the amount of finance costs that landlords can offset against tax is being reduced to the basic rate and landlords are now being taxed on their turnover rather than profit, unlike any other business.
According to the study by Sheffield Hallam University, on behalf of the RLA, 19% of landlords are less willing to let to under-35s as a result of the tax increases. Previous studies have also found that many landlords are moving to the short-term holiday let market to avoid the tax changes, are looking to increase rents to cover the extra costs, or are planning to sell their properties, which will cut supply for young tenants who need long-term rental housing the most.
Following a commitment by the Communities Secretary, Sajid Javid, at the Conservative Party conference, that next month’s Autumn Budget will include incentives to encourage and support landlords offering longer tenancies, 52% of landlords said that tax relief for offering longer tenancies would make them more likely to let to young tenants. 58% also said that reversing the tax relief changes altogether would make them more likely to do so.
Commenting on the findings, the Policy Director of the RLA, David Smith, says: “As ministers work on a Budget aimed at supporting young people, today’s findings show that it will be this very same group that is hit hardest by tax rises on the private rental market.
“With many landlords considering changes to their lettings strategies to escape the hikes, many young people will find it increasingly difficult to find the long-term homes to rent they desperately need.”
He adds: “Ahead of the Budget, we are calling on the Government to scrap the tax hikes and support good landlords to develop the new homes to rent we need alongside all other tenures.”
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