The National Residential Landlords Association (NRLA) is calling on the Chancellor to scrap the 3% stamp duty levy on the purchase of homes to rent where landlords invest in properties that add to the net supply of housing.
This would include developing new housing, converting large properties into affordable units, changing the use of a property from commercial to residential or bringing some of the almost 650,000 empty homes in England back into use.
This comes as the Royal Institution of Chartered Surveyors concluded that rents will rise because of demand for properties increasing, whilst new instructions from landlords continue to “dwindle”.
Rightmove revealed that outside London asking rents increased in the fourth quarter for 2020 for the first time since 2011, leading to a record average of £972 a month.
The data revealed that in the suburbs, towns and villages, available housing is lower than normal for this time of year whilst demand is higher.
Ben Beadle, chief executive of the NRLA, said: “To have a tax on developing new housing is completely nonsensical at a time when more is needed.
“Supporting growth in the private rental market, alongside all other housing types, would provide a significant boost to the economy in the midst of the COVID-19 pandemic.
“Research published last year suggests that landlords inject over £3.5bn into local businesses across the UK.”
Another change the NRLA wants to see made is to ensure the tax system encourages the provision of longer-term rental property over short-term holiday lets.
From April this year, the final phase of reducing mortgage interest relief for landlords to the basic rate of income tax will be completed.
This measure does not apply though to furnished holiday lets so has encouraged the removal of properties from the long-term market for use as short-term holiday lets, suggests the NRLA.
Beadle adds: “To be taxing long term homes to rent less favourably than holiday lets is simply bizarre.
“It completely undermines efforts by the government to encourage the provision of long term, secure housing.
“It is time for the government to realise that its tax policies have created a shortage of rented housing.
“This can only mean higher rents and reduced choice for renters.
“This is not going to do much for the levelling up agenda.”