Buy to let landlords should fork out an investment tax of 22% a year on top of any taxes they already pay to help fund the building of social housing, a think-tank has announced.
Generation Rent, funded by the Nationwide Building Society, has launched a petition to garner support for their proposal.
The Nationwide is a major funder of buy to let mortgages through their brand The Mortgage Works.
Generation rent claims landlords are subsidised by £27 billion of housing benefits and tax while generating rents and capital gains of £77.7 billion every year.
On top of the income tax and capital gains tax paid, the think-tank wants to raise an extra £9.3 billion a year from property investors to finance house building by local authorities.
They reckon this could pay for 90,000 homes every year.
The target is to reduce the nation’s reliance on private landlords, to cut housing benefit and to bring down the cost of rents.
The report also claims landlords can claim 10% of their rental income tax-free for wear and tear without showing that they have made any repairs.
This is inaccurate – the wear and tear allowance only applies to fully furnished lettings.
“During this age of austerity, landlords have made a colossal amount of money from capital gains and rents, and enjoyed generous subsidies while their tenants face stagnant wages and cuts to the welfare state,” said a Generation Rent spokesman.
“People who work for a living are funding through their taxes the lifestyles of people who can make a living simply because they own property and someone else doesn’t.
“To redress the balance, the government can use the tax system to redress the balance and make sure landlords pay their fair share. While the value of the missing income and capital gains tax will fluctuate year by year, the annual outlay of £9.3bn in housing benefit shows no sign of going away.”
The think-tank proposes that a national register of private landlords would be needed to help collect the levy and to police rogue landlords who avoid registration.
Landlords who failed to pay the levy would be charged additional penalties, the spokesman added.
UPDATE 12/02/2015 – Nationwide Responds to LandlordZONE – (See Tweet Below)
“That’s incorrect. Generation Rent receives funding from Nationwide Foundation, an independent charity http://www.nationwidefoundation.org.uk.
We are Foundation’s main benefactor, but funding decisions are made by Foundation’s Board of Trustees, which is independent.
We do not endorse the organisations funded by the Foundation but we respect its right to create its own strategy.”
Nationwide Press – @NationwidePress
— LandlordZONE (@LandlordZONE) February 11, 2015
— LandlordZONE (@LandlordZONE) February 12, 2015