The Residential Landlords Association (RLA) is urging the government to reconsider pending taxation changes announced by the now former chancellor George Osborne last year.
The Association wants the government to use extra revenue raised from the stamp duty surcharge introduced in April 2016 to abolish planned reforms to mortgage interest relief and prevent landlords disinvesting or having to increase rents.
Despite various experts projecting that Section 24 will have an adverse impact on the PRS, forcing many existing landlords to exit the market, thus reducing the supply of much needed housing stock in the sector, the government plans to press ahead with the tax changes.
The National Landlords Association (NLA) claims that around 440,000 basic-rate tax payers – 22% of approximately 2 million landlords in this country – will move up a tax bracket from April this year, once planned changes to landlord taxation comes in to force.
However, with new figures from HMRC revealing that the government has raised an additional £630m in the first year since the introduction of a 3% stamp duty surcharge on the purchase of additional properties, including homes to rent, the NLA wants to see the government go easy on buy-to-let landlords as far as mortgage interest relief changes are concerned.
Figures published yesterday by HMRC show that in just the first nine months the tax had already raised £1.19bn, £560m more than forecast for the whole year. If this rate continues, revenue for the year will exceed £1.58bn, almost £1bn more than projected; offering room to give landlords a - tax - break.
A recent RLA survey found that 58% of landlords are considering further reducing investment in their rental properties because of the proposed tax changes, while 66% forecast that the tax changes will place upward pressure on market rents.
RLA Policy Director, David Smith, said: “In raising nearly twice as much in just nine months as the tax was predicted to make in one year this Stamp Duty windfall gives the Government a chance to back the rental market and support the development of new homes which we desperately need.
“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first-time buyers out of the market.
“Assessments by the Institute for Fiscal Studies and the London Schools of Economics contradict the Treasury’s position completely. It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected.
“The government has received far more money than it expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.”