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 This increases the likelihood that some or all of it's content is now outdated.

A new report published by the Taxpayers Alliance warns that tenants will be hurt by recent tax changes, as landlords increase rents to offset their extra costs.

The report titled “Taxing tenants: how taxes on landlords end up hitting tenants” by Rory Meakin, July 2016, concludes that policy decisions by government will have an adverse effect on tenants.

“These changes are not sufficient to tackle the housing crisis, whose underlying cause is planning policy restrictiveness,” says Meakin.

To summarise the main findings:

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  • The 3 per cent stamp duty additional homes surcharge will help prospective buyers but it will hurt tenants in rented accommodation
  • The restriction of finance cost relief for individual landlords will also advantage prospective buyers at the expense of tenants
  • Both policies will distort housing markets, with implications for incomes, employment and overall welfare
  • These tax hikes make Britain’s complex tax system even more complicated and distort ownership structures
  • Other local policy choices such as increasing the cost of houses in multiple occupation (HMO) licences and introducing landlord licencing schemes will hit tenants
  • Existing owner-occupiers taking advantage of lower house prices to expand their consumption will tighten supply conditions in the lettings market, raising rents

The reports main recommendations are:

Cancel the additional homes stamp duty surcharge and restrictions on finance relief

Halve all stamp duty rates immediately with a view to abolishing it entirely

Reform planning restrictions to declassify some green belt land and allow taller, denser construction in urban areas

The Taxpayer’s Alliance Report

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 This increases the likelihood that some or all of it's content is now outdated.

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