The NLA is calling on the Government to acknowledge the growth in the private-rented sector by making changes to the tax system in the Budget that will increase the availability of privately rented accommodation. By addressing the following five areas, the Chancellor could provide much needed stimulation and investment as well as increase the overall quality of housing stock.
Capital Gains Tax (CGT): Landlords should be entitled to utilise ‘roll-over’ relief to encourage reinvestment of released capital gains. The current exclusion of residential property from access to this relief discourages landlords from reinvesting and from long term business planning. Released gains could a lso be used for renovating and modernising housing stock.
Stamp Duty Land Tax (SDLT): The ‘slab system’, whereby tax is calculated according to fixed rates in arbitrary price bands, should be immediately reformed. Unlike most taxes, SDLT is neither regressive nor progressive and leads to inevitable distortions in property prices. In addition, where landlords make m ultiple transactions, each property should be treated individually for the purposes of Stamp Duty and not, as in the current system, as one bulk transaction.
Value Added Tax (VAT): The VAT rate for renovations and home improvements should be reduced to the lowest possible rate of 5 per cent. Social landlords already benefit from significant funding provisions in order to meet targets for the provision of decent homes. Cost barriers should be removed which discourage landlord’s from modernising housing stock.
Council Tax: The way in which Council Tax is assessed for multi-occupancy dwellings varies greatly across the country. It causes unnecessary uncertainty among landlords and often leads to a failure to maximise affordable and much-needed accommodation. The NLA is calling for immediate Government clarification to ensure consistency across local authorities.
‘Rent-a-Room’ Scheme: The tax-free threshold for homeowners taking in lodgers should be extended from £4,250 to £9,000 per year in order to keep up with current rental prices. The NLA fully supports the Spareroom.co.uk ‘Raise the Roof’ Campaign which argues that the prospect of comple ting a tax return has become a major disincentive to homeowners who could provide much needed accommodation.
David Salusbury, Chairman, NLA, said:
“Given the current housing shortage the Chancellor should use the budget to make investment in property easier and the management of a residential portfolio more cost effective.
“None of the changes for which we are calling would put significant pressure on public funds or reduce tax income to any great degree; in fact most should encourage increased economic activity.”
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