Recent Government figures showed that between 2001 and 2008 the number of people renting increased from 2.1 million to 3.1 million. However, the current tax system actively discourages investment in rental accommodation by landlords.
The NLA is calling on the Government to acknowledge the growth in the private-rented sector by making changes to the tax system in the forthcoming Budget that will increase the availability of privately rented accommodation. By addressing the following five areas, the Chancellor could provide much needed stimulation and investment as well as increase the overall quality of housing stock.
- Capital Gains Tax (CGT): Landlords should be entitled to utilise ‘roll-over’ relief to encourage reinvestment of released capital gains.
- Stamp Duty Land Tax (SDLT): The ‘slab system’, whereby tax is calculated according to fixed rates in arbitrary price bands, should be immediately reformed.
- Value Added Tax (VAT): The VAT rate for renovations and home improvements should be reduced to the lowest possible rate of 5%.
- Council Tax: The way in which Council Tax is assessed for multi-occupancy dwellings varies greatly across the country. It causes unnecessary uncertainty among landlords and often leads to a failure to maximise affordable and much-needed accommodation.
- ‘Rent-a-Room’ Scheme: The tax-free threshold for homeowners taking in lodgers should be extended from £4,250 to £9,000 per year in order to keep up with current rental prices.
David Salusbury, chairman, NLA, said: “Given the current housing shortage the Chancellor should use the upcoming budget to make investment in property easier and the management of a residential portfolio more cost effective.
“None of the changes for which we are calling would put significant pressure on public funds or reduce tax income to any great degree; in fact most should encourage increased economic activity.”