Research by the Residential Landlords Association (RLA) shows that in the wake of this month's Summer Budget, over two thirds of landlords are considering increasing rents to cover the tax cut announced by chancellor George Osborne.
The Association's findings undermine Her Majesty's Revenue and Customs’ assessment that the measures will have no significant impact on rent levels.
Under the Chancellor's new rules, landlords' mortgage interest tax relief on purchases of buy-to-let homes is to be restricted to the basic rate of income tax, while the entitlement to an automatic wear and tear allowance for their properties will be abolished from 2017.
The RLA is warning, however, that the basis of the Budget assumptions is wrong.
“The reality is that the Chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct,” says Alan Ward, Chairman of the RLA.
“Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.”
“The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different.
“It’s time the Treasury recognised residential landlords as a business.”
The RLA has also this week announced the appointment of leading housing lawyer David Smith as its new policy director. He succeeds respected and long-standing RLA board member Richard Jones, who will continue as company secretary.
“I am delighted to join the RLA. With a new housing bill proposed and major changes to the tax regime, it is a challenging time for landlords. Private renting is crucial to meeting Britain’s housing need and supporting the flexible workforce the economy demands,” says Smith.