The new Tory-led government is being urged to reverse punitive tax policies affecting private landlords in order to increase much needed housing supply in the rental market by giving existing and prospective buy-to-let investors more reason to invest in the PRS.
The anti-landlord policies adopted by the Conservative government has had an adverse impact on private landlords, especially the smaller players, over the last 18 months, deterring many from investing further in the industry, as reflected by a sharp fall in buy-to-let valuation activity.
The latest report from Connells Survey & Valuation shows that the proportion of buy-to-let valuations in April was 6% below the five-year average for the month.
The percentage of valuation activity undertaken in the buy-to-let sector fell from 11% in April 2016 to just 7% in April 2017, following the reduction in mortgage tax relief.
Since 6 April - the start of the existing financial tax year - landlords are now only permitted to offset 75% of mortgage interest payments against rental income, down from 100% in the previous tax year.
Aside from the fact that mortgage interest relief for residential landlords will be restricted to the basic rate of income tax, the government has also scrapped the annual ‘wear and tear’ allowance – which allowed 10% of rental profits to be written off for notional wear and tear – and introduced a 3% stamp duty surcharge for those acquiring an additional home, including a buy-to-let property.
But with a new government in place, the spotlight must firmly be on the rental sector as a key component in shoring up housing supply, according to Carol Pawsey, lettings Director at Kinleigh Folkard & Hayward.
She said: “The new government, however it is compiled, needs to ensure we have a balanced private rental sector that attracts investors and landlords to the market while looking after the long-term interests of the increasing number of tenants looking for quality long-term rental homes.”