A controversial proposal for a £300m tax grab on landlords appears to closely follow a policy suggestion put forward by activists in the Generation Rent group.

A few days ago Generation Rent chief executive Ben Twomey wrote in the I newspaper: “The Budget has never been more important for tenants. Mortgage interest relief needs to be withdrawn from holiday lets, encouraging landlords to prioritise homes over holidays and enable renters to stay in long-term tenancies.”

The proposals – as reported yesterday on Landlord Today – followed an apparent government leak to The Sunday Times.  

The paper said: “The Chancellor [Jeremy Hunt] is to launch £300m tax raid on second home owners who make money from holiday lets in an attempt to make the [income tax cut] sums add up.  He will abolish a series of tax perks for landlords who rent out their properties to short-term holidaymakers rather than long-term tenants.

“Although it represents another tax grab by the Conservatives, Hunt will argue it will help tackle the housing shortage in coastal areas and holiday hotspots such as Cornwall and the Lake District, where landlords are converting to holiday lets to benefits from generous tax perks, depriving local people of housing.”

Generation Rent also clearly believes it has influenced the government. Generation Rent deputy chief executive Dan Wilson Craw tweeted from his own social media account: “This would be a huge victory for Generation Rent and our thousands of supporters across the UK.”

The property industry representing landlords and letting agents has robustly criticised the ideas.

Nathan Emerson, chief executive of the main agents’ trade body, says: “Propertymark are extremely concerned to see reports within the news of a rumoured £300m attack on landlords within the budget, all at a time when many have already left the sector and many more are just about holding on.

“Just like traditional homeowners, inflation and interest rates have hit landlords with force and there needs to be recognition from the UK government that to provide high quality homes, whether they be short term lets or longer-term housing, the system must be workable.

“It is unacceptable there is constant aim being taking at landlords to the point the viability of the entire system is becoming seriously questionable for both existing landlords and future investors.”

There is also sharp criticism from the National Residential Landlords Association

“The Chancellor needs to address the chronic shortage of long-term rentals by attracting new landlords to the market. Squeezing holiday lets is not the answer. He should follow the advice of the Institute for Fiscal Studies and reverse punitive tax hikes which have stifled the supply of the homes renters desperately need” says chief executive Ben Beadle.

“Scrapping the stamp duty levy on the purchase of additional homes would see almost 900,000 new long-term homes to rent made available over the next 10 years. This would lead to a £10 billion boost to Treasury revenue as a result of increased income and corporation tax receipts.”