policy<\/a> of cutting tax relief on buy-to-let property finance costs \u2013 which include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans \u00a0\u2013 down to the basic rate of income tax, is said to be the driving force behind this exodus from the long-term rental market into the holiday let industry.<\/p>\nThis is because holiday lets have managed to escape many of the legislative changes imposed by the government because they are classed as businesses rather than investments by the HMRC, meaning they still qualify for many of tax breaks buy-to-let landlords no longer enjoy.<\/p>\n
The Government\u2019s tax measures were originally designed to make the system fairer as, under the old system, landlords with higher incomes received the most generous tax relief. However, new research has found these policies are making many everyday landlords significantly worse off with their rental yields significantly affected. The research from the National Landlords Association shows their members experienced a reduction in average yields from 6.7 per cent in 2011 to only 5.4 per cent at the end of 2019.<\/p>\n
The worst affected landlords surveyed were those with larger portfolios, 20 or more properties, who had typically seen yields fall from 7.7 per cent less than a decade ago to 5.8 per cent today \u2013 a drop of almost one third!<\/p>\n
The Residential Landlords Association (RLA) and the National Landlords Association (NLA), are calling for the Chancellor of the Exchequer, Rishi Sunak, to use his first Budget to take immediate action to reverse the decline in the supply of rented housing, arguing that with landlords selling more properties than they are buying and others switching to short-term holiday lets for tax reasons, unless action is taken tenants are going to find it increasingly hard to find a property to rent.<\/p>\n
The three per cent stamp duty levy, charged on top of current stamp duty rates on second homes and buy-to-let properties, is another measure that the professional bodies claim has slowed landlords\u2019 investment in new properties to rent out.<\/p>\n
David Smith, Policy Director for the Residential Landlords Association, said:\u00a0\u201cGovernment policy is actively encouraging the growth of holiday homes at the expense of long-term homes to rent which many families need. This is completely counterproductive, making renting more expensive and undermining efforts to help tenants save for a house of their own.<\/em><\/p>\n\u201cThe Chancellor must use his Budget to give tenants a better deal by supporting good landlords to provide the homes to rent that they want to live in.\u201d<\/em><\/p>\nChris Norris, Director of Policy and Practice at the National Landlords Association, added: \u201cThe tax system with which landlords must contend is no-longer fit for purpose. HM Treasury has constructed a series of barriers to investment, which make running an efficient and successful lettings business borderline impossible.<\/em><\/p>\n\u201cAs he prepares his first Budget, we hope that the Chancellor will take the opportunity to use taxation to encourage investment in new and existing homes alike. Mr Sunak must recognise that housing costs can only be reduced by making it easier, not harder, to provide good quality rented homes.\u201d<\/em><\/p>\nDavid Cox, <\/strong>ARLA Propertymark Chief Executive, also commented: \u201cThe growth in short-term lets is particularly concerning for the traditional private rented sector. As landlords are continuously faced with increased levels of legislation, it\u2019s no surprise they are considering short-term lets as a chance to escape this.<\/em><\/p>\n\u201cUnless the sector is made more attractive, landlords will continue to exit the market resulting in fewer available properties and increased rent costs.\u201d<\/em><\/p>\nIt is clear from this research that there needs to be a fundamental review of tax policy affecting the private rented sector to ensure that neither landlords nor tenants suffer from these unintended consequences of the government’s legislative changes. We would love to hear your views.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
A plethora of legislative changes affecting the buy-to-let market is driving landlords from the long-term rental market into the holiday lettings sector. These changes are damaging the UK\u2019s rental industry, alienating not only landlords but having a knock-on effect for tenants too, the Residential Landlords Association (RLA) has claimed. The RLA\u2019s warning comes as new …<\/p>\n","protected":false},"author":7,"featured_media":2395,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40,45],"tags":[49,132,131],"_links":{"self":[{"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/posts\/2393"}],"collection":[{"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/comments?post=2393"}],"version-history":[{"count":0,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/posts\/2393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/media\/2395"}],"wp:attachment":[{"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/media?parent=2393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/categories?post=2393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.propertista.co.uk\/wp-json\/wp\/v2\/tags?post=2393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}