The government should restore tax relief for mortgage interest and extend the deadline for proposed EPC energy improvements if it is to avert a looming rental property crisis.
Buy-to-let sales platform Vesta Property has already seen a surge in properties for sale as many private landlords exit the rental market due to the removal of tax benefits, substantial costs relating to environmental regulation, higher interest rates and increasing maintenance and compliance costs.
CEO Russell Gould (main picture) says: 'It is vital that the government supports the development of the rental market and addresses the failure of Section 24 to maintain a balance of quality housing for all individuals and families.'�
Section 24 removes a landlord's right to deduct finance costs, including mortgage interest and arrangement fees, from their rental income before calculating their tax liability.
This means landlords are less likely to borrow money to make energy efficiency changes and more likely to sell properties, which is not good for renters, according to Gould.
He believes the government must incentivise landlords to invest in their properties and implement green initiatives by providing tax relief for landlords who undertake retrofitting projects.
These initiatives will improve the quality of rental properties and living conditions for tenants, but also contribute to the UK's net-zero carbon emission goal.
Vesta Property hopes the government will consider the impact of its policies on the wider rental market and the environment as it prepares for the next budget announcement.
'With a greater focus on supporting landlords who invest in their assets and implement green initiatives, the UK's rental market can continue to grow,'� adds Gould.
Read a complete guide to landlord tax for 2023.