Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

A London School of Economics academic study says Buy-to-let tax will push up the rents and will hurt tenants more than landlords.

Tenants could bear the brunt of buy-to-let tax changes, that’s the conclusion of a recent study produced by the LSE.

Kath Scanlon, one of Britain’s leading housing academics, has said the Government’s overt targeting of private landlords through higher rates of income tax, stamp duty and capital gains tax will only result in a reduced housing supply and tenants paying higher rents.

Ms Scanlon, a research fellow at the London School of Economics, has strongly criticised the tax measures, by saying: “It is not clear what the Government wants these policies to accomplish.

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“They seem to reflect the public unpopularity of landlords, who are easy objects of blame for the current situation in the housing market, especially in London.”

Basing her comments on here studies and a report co-written by her, Christine Whitehead and Peter Williams, arguing that demand for rental property will continue to grow in coming years – and even faster in the case of a weakening economy. They think that small-scale private landlords would in England, as in the rest of Europe, provide the bulk of housing, even if institutional investors started “building to let” on a larger scale.

The report concluded that: “Shrinking the sector does not seem sensible given what we know about unmet demand and need.”

The 3% surcharge on stamp duty for buy-to-lets and the removal of mortgage interest relief against landlords’ rental income, before calculating their tax bill, is a move expected to wipe out profits for many. In addition, landlords are to be excluded from new lower rates of capital gains tax announced by George Osborne in his March 2016 Budget.

Coupled with the Bank of England’s policies aimed at restricting private landlords’ borrowing, Ms Scanlon maintains that existing landlords would be likely to pass on higher costs through rent increases.

“It is said that tenants cannot pay more than they already are – yet a lot of sitting tenants have not had recent rent increases. That may change.”

Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

1 COMMENT

  1. Mass immigration means one house a minute needs building every minute during the working week. But they like to blame Landlords for everything instead

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