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Landlords should be offered tax incentives, says Tory peer

Lord Flight, a former Conservative Shadow Chief Secretary to the Treasury, has once again criticised his own party’s buy-to-let tax changes, warning they could further exacerbate the housing crisis.

Ever since Margaret Thatcher declared her belief in a ‘property-owning democracy’ and introduced Right to Buy in 1980, the UK was converted into a country that saw houses as something to make money from, not just to live in, fuelling the growth of the private rented sector.

But instead of treating the private rented sector as part of the problem, Lord Flight is urging the government today to ‘recognise the important part it must play in solving the housing crisis’.

Having long provided mega double-digit returns for investors, investment in buy-to-let has outperformed all major asset classes in recent years.

However, Lord Flight fears that the government’s decision to introduce a number of measures to curb the growth of buy-to-let landlords will lead to a mass exodus of private landlords, reducing the supply of much needed homes in the private rented sector.

In an article published on the Conservative Home website, Lord Flight said that the tax chances, including the phasing out of mortgage interest relief will inevitably push rental values higher.

He wrote: ‘The biggest domestic issue of our times is the high cost of housing in the UK both pricing the younger generation out of home ownership and driving up rental costs.

‘Yet, since 2015, the private rental market has faced an onslaught of tax hikes, restricting mortgage interest relief to the basic rate of income tax, putting a premium stamp duty levy on the purchase of new homes to rent; not extending the 20% rate of capital gains tax to residential property and taxing a landlord’s turnover rather than profit, unlike any other business sector. The rationale for this assault on largely individual landlords was to shrink the private rented sector and so expect to increase the supply of homes available for potential home owners. It is, however, a nonsense to blame private landlords for the housing crisis – rather the large increase in private rented properties over the last decade has alleviated the shortage of residential accommodation.’

He insisted that a ‘strong and growing private rental market alongside a growing homeowner sector’ is necessary for a healthy UK housing market.

The politician added that due to the importance of the buy-to-let sector, it is concerning that, according to research by the Residential Landlords Association, 69% of landlords are not making further investment in rental property, ‘largely as a result of the punitive stamp duty levy they now face’.

To help encourage investment in the BTL sector, Lord Flight would like to see the government scrap the stamp duty surcharge and introduce ‘tax incentives for landlords prepared to offer longer-term tenancies’, insisting that it is ‘somewhat illogical for the tax system, as it currently does, to make it more attractive for a landlord to switch properties to short term holiday lets than to continue providing homes for long term rental’.

He also wants ministers to consider providing landlords with capital gains tax relief where they sell a property to a sitting tenant to become a home owner.

‘It is time that the Conservative Party went back to Nigel Lawson’s more positive housing policies towards the private rented sector,’ he concluded.

To read the article in full, click here

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    If the Tory party were really interested in alleviating the Housing crisis they could start with scrapping Right to Buy. Vast amounts of money are lost through the huge discounts given to right to buy owners, who often end up selling, which inevitably leaves their property let at a vastly higher rate in the private rented sector. We know right to buy properties aren't being replaced one for one, the whole policy has been a detriment to the country and can only have been about winning votes.
    The next thing would be actually make the legislative changes that enables house building to take off again. This bit is simple, if you need more houses, build more.
    As for offering tax incentives for landlords, that's nothing more than tinkering with the tenure of the existing stock. Houses aren't vanishing in puffs of white smoke once their landlord owners sell them anymore than they're appearing out of thin air as soon as landlords feel confident enough to sign their next buy to let mortgage agreement.
    This is nothing more than a typical Tory politicising a national crisis to pander to traditional voters.

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    the tories no longer exist as a party--they are social democrats

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    why take Mortgage interest relief from Landlords who have been paying tax from day one like me!
    Why punish honest good landlords and tar them with the same brush?
    I agree Landlords who have fiddled tax and/or not declared their income should never be allowed tax breaks!

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    tory or labour we aren't going to get any tax incentives , they are just going to make life harder and more expensive for all of us, no problem though, the extra expense will be passed onto the tenant.

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