The Residential Landlords Association (RLA) has accused Chancellor Alistair Darling of missing an opportunity to create jobs and add prosperity in the housing market through fiscal stimulus in his Budget.
RLA Chairman Alan Ward said: “Landlords should be treated as businesses, with taxation treatment altered to take account of such a change in status in line with the recommendations of the 2008 Rugg Review.
The RLA have long argued that the business of renting properties as accommodation is economically important and should be recognised as such by the taxation system.”
The association explained that a consequence of this would be to enable those managing residential property as a business to claim Capital Gains Tax (CGT) rollover relief for reinvestment. This would free up what is a largely stagnant property investment market with landlords currently more likely to sit on properties due to potential CGT liabilities. Changing this policy would:
- Lead to properties changing hands more often, with landlords more likely to refurbish and improve a property when it changes ownership.
- Increase tax receipts for the Government from stamp duty, land tax and other taxes as a result of properties changing hands more easily.
- Portfolio sales should not be aggregated, so stamp duty is paid instead on the value of individual properties.
Last year, the Economic and Financial Affairs Council of the EU voted to allow member states to reduce the rate of VAT on renovation and repair on private dwellings to 5 percent. The RLA is therefore calling on the Government to alter VAT on such work in the UK accordingly.
This, it says, will provide a real boost, encouraging landlords to bring forward programmes for renovations and repairs. Such action would further provide a boost for a construction industry that has been badly hit by the recession. Likewise, such support would constitute an important part of the Government’s efforts to reduce carbon emissions from the UK’s housing stock.
The English Housing Survey recently reported that 40 percent of all housing stock in the Private Rental Sector (PRS) was constructed before 1919, a higher proportion than any other tenure.
Given this, landlords in the sector face a unique set of pressures when looking to improve their stock and ensure they maintain high levels of energy efficiency, faced as they are with some of the oldest stock in the housing market.
The RLA says the PRS has an important role to play in relieving pressure on social housing waiting lists and providing accommodation to those struggling to get a foot on the housing ladder.
As such, the organisation is calling for a number of measures aimed at supporting private landlords to carry out the improvements to properties and energy efficiency measures being expected of them by Government.
“Landlords represent more than a million votes. We look to a future government to recognize the economic value of the private rented sector,” concluded Ward.
