Autumn Statement: Full tax review vital for future of the PRS
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Ahead of next month’s Autumn Statement the NRLA has submitted its calls to the Treasury. With the gap between supply and demand growing ever wider, the association is calling for positive action to increase the supply of homes and encourage investment to help tenants access the homes they so desperately need.
A full review of landlord taxes, a reversal of the freeze Local Housing Allowance (LHA) rates and solid targets when it comes to court reform are among the NRLA’s recommendations ahead of the Autumn Statement.
The NRLA has put forward a set of practical, workable suggestions which, if implemented, will act as a roadmap navigating the Government out of the current crisis in the private rented sector.
The Autumn Statement will be held on 22 November and will see Chancellor Jeremy Hunt set out the Government’s tax and spending plans, provide an update on his economic strategy and introduce any changes to policy.
With the recent Conservative Party Conference high on rhetoric and low on detail, the association wants to help a Government that is seemingly out of ideas with solid policy suggestions that have the potential to make an impact on the ground almost immediately.
These include the plans to reverse the freeze on LHA rates, which has pegged benefits to rents charged in 2019 – despite real-world rents increasing by 10% since then.
The Government’s own data suggests that 61% of private rented households in receipt of housing benefit in England and Wales face a shortfall between their benefit and monthly rent and the unfair freeze continues to prevent low-income and vulnerable tenants from entering the PRS.
Bringing LHA rates in line with current market rents could immediately address the challenges faced by some of the most vulnerable renters, helping them into the homes they need, in the places they want to live.
Urgent review of tax needed
One of the key calls underpinning the NRLA’s budget submission is the need for an urgent and comprehensive review of the impact of recent tax changes on the sector. This would include the higher rate Stamp Duty Land Tax (SDLT) levy and removal of Mortgage Interest Relief (MIR).
The changes were brought in by former Chancellor George Osborne to reduce private landlord investment in long-term rentals, on the basis this would 'free up' properties and help ‘generation rent’ become ‘generation buy’.
This has backfired, leaving in insufficient numbers of PRS homes to meet demand, forcing rents up and reducing options for tenants.
Such a review is supported by the influential Levelling Up, Housing and Communities Select Committee, which has backed the NRLA’s campaign on the issue, and has called on the Government to change the tax regime to ‘make it more financially attractive to smaller landlords’.
Another of the key NRLA tax calls is that Capital Gains Tax relief should be available where a landlord sells a property to a sitting tenant or first-time buyer and then invests in a new property to let.
Slashing court waiting times
Significant reform of the PRS is on the way as part of the government’s rental reform plans, yet any missteps could exacerbate the existing supply crisis. One of the key issues is the ability of landlords to regain possession of their properties in legitimate circumstances once Section 21 – the so-called ‘no fault eviction’ – is gone.
It currently takes an average of around half a year between a legitimate claim being made to a landlord gaining possession. This is far too long and means many landlords lack confidence that the courts will be able to process the inevitable increase in possession-based hearings once Section 21 is abolished.
The NRLA is calling on the Government to commit to setting solid targets as regards processing times for possession claims. This MUST be done prior to abolition of Section 21 and should, at a minimum, meet the legal guideline of eight-12 weeks to process claims.
NRLA Chief Executive Ben Beadle said: “A high quality and well-supplied PRS is both socially and economically beneficial, enabling a flexible labour market while also serving as a stepping stone into homeownership for first-time buyers.
“Despite the importance of a thriving rental market, the Government's efforts to reform the sector have been fragmented and have fallen short in acknowledging its crucial role in housing a diverse range of tenants.
“Our submission ahead of the Autumn Statement includes fair, workable and practical proposals that can make a real difference to people’s lives, giving landlords confidence to remain in the sector at a time of unprecedented crisis, while offering a helping hand to renters in need of a place to live.”
To download a copy of the full submission click here.
