I am asking Damian Green the longstanding Conservative MP for Ashford to remind new Chancellor Rishi Sunak and PM Boris Johnson to use their persuasive skills to highlight and take a more holistic approach and attitude to the private rented sector and thus tackle issues affecting Ashford landlords’ ability and capacity to run an effective buy-to-let business:
For some thirty years, the Government have abdicated the responsibility of housing the masses from local (council housing) authorities to the estimated 1.5 million buy-to-let landlords.
However, since 2015/16, Ashford landlords have faced increasing tax burdens as each year goes by, with the removal of mortgage interest rate relief on income tax (Section 24), the introduction of the 3% surcharge on stamp duty, and the reduction of the letting relief on capital gains tax.
My research has calculated the total income tax contribution by 1,748 Ashford private landlords in the tax year 2015/16 was £4,562,481
However, the eradication of higher rate mortgage interest relief (also known as Section 24) announced in 2015 by George Osborne has been estimated to add a further £1.9 billion nationally to landlords’ tax liabilities. Whilst raising money from landlords is an easy target, and the tax receipts are attractive for the Government – such a shortsighted policy is likely to seriously impact the supply of available rental property over the short and medium term – which will be very good news for landlords’ rental yields!
And by 2021/2, when the full extent of the Section 24 relief kicks in, that income tax liability will rise to £6,661,222.
This doesn’t take into account additional liabilities such as Capital Gains Tax, the additional 3% on top of the prevailing Stamp Duty Land Tax, and VAT.
Ambiguity and lack of certainty is the foe of all investment, as has been seen with Brexit. Now, just as things are starting to get rosy in Q1 with pent-up demand being released with the ‘Boris Bounce’, the last thing we need is for the Government to see landlords as a constant cash cow – it is imperative the Government acknowledges the value private landlords offers the UK in housing over of 9.45 million people in the country.
Westminster needs to take a far more balanced approach to the significant issues of landlords’ rights of possession, taxation and energy efficiency, and recognise the service the private rented sector offers to the country in effectively housing over a fifth of households and avoid the unintentional consequences of making renting a property harder for tenants… because, the way things are currently going against landlords, it is not financially attractive to invest in buy-to-let property unless able to do so without a mortgage!