Specialist mortgage lender Paragon has called on the Chancellor to make no further changes to the taxation of landlords in today's Budget and has suggested a full review of the UK’s housing requirements.
The UK’s population is forecast to grow from 64.6 million in 2014 to 74.3 million in 20391. With limited housebuilding, reduced investment in social housing and a round of tax increases planned for landlords operating in the private rented sector, Paragon says there is little prospect that quality, affordable housing will be available for all without co-ordinated action by the Government.
Whilst home ownership is a prized objective for many, private landlords are increasingly being called upon to provide support for those who cannot or choose not to buy either because of mortgage affordability and regulatory constraints, lifestyle changes or a requirement for flexibility.
So far, Government incentives to encourage home ownership are against a backdrop of reduced investment for local authority housing provision, less support for housing associations through a revival of the Right to Buy’ and a complex layering of tax increases and policy changes for private landlords.
The dangers of this approach are highlighted in the conclusions of an independent London School of Economics Report commissioned by Paragon which argues that the PRS plays a key role in the UK’s housing system and that any slowdown in the expansion in supply of privately rented housing arising from changes in taxation and regulation will put pressure on rents and household budgets.
Paragon Group chief executive Terrington said: “The Government needs to instigate a thorough review of UK housing need in the context of the expected population growth. The size of forecast population growth is the equivalent of nine cities the size of Birmingham.
“The private rented sector is an important provider of homes for people in the UK. For many years, successive Governments have actively reduced the provision of social housing. This, together with other regulatory changes such as the Mortgage Market Review which has restricted mortgage credit to homebuyers, mean more people are turning to the PRS.
“There is real risk of lasting damage to the sector if the impact of the changes is not fully understood and particularly if the Government continues to layer one measure upon another without a thorough and robust assessment of the progressive impact different measures will have.
“The PRS does not have a binary relationship with home ownership: holding back growth in the number of properties for rent will simply not increase home ownership and may increase costs and reduce amenity for tenants.
“In the context of forecast population growth, together with a current and projected housing shortage, the key requirement is for the Government to create a stable policy framework that will encourage investment in the supply of good quality, affordable housing across all tenures, so that people can choose the best housing option to suit their lifestyle.”
Chancellor George Osborne will be announcing the Budget at 12.30pm on Wednesday 16 March.
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A quality piece of research done by some one who knows the PRS but will the Chancellor listen, I doubt it as it would be too damaging to his future political aspirations to back track at this late stage.
Lets hope they take the advice and reconsider as government does tend to jump the gun a bit without carrying out proper intensive reviews of some of their actions and yes they can be wrong at times although they would never admit it.
Failing a U turn on this policy a lot rests on the Judicial review due shortly on the legality of changing the principle of taxation for the landlord sector but no other sector.
Private Landlords are going to be in a terrible predicament when the new rules come in , Thanks Paragon for taking the time to carefully consider the situation hopefully other lenders such as TMW, and Birmingham Midshires will also offer support.
Private Landlords are about to become an endangered species, A good article if you want to see how bad it going to be is found by searching Barclay`s Landlord Taxes. (hope this helps)
I became a landlord investing a small amount of money and borrowing the rest on an interest only buy to let mortgage. My tenants love the house and want to live in it forever. They cannot afford to buy. I have kept the rent low as they are a young family, and I am happy with the return I get. If I understand the changes correctly , I will be taxed on the full amount of rent, this will mean I will be making a loss, so I am going to have to sell, putting the family in an upsetting position of losing the house they love.
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