Spring Budget 2017:
The Spring Budget 2017 is an important one just prior to triggering article 50 of the Lisbon Treaty, which will set out the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.
The Government will publish its Spring Budget on Wednesday 8th March 2017 and will be the last one announced in the autumn, followed by a spring statement.
The Private Rented Sector (PRS) has in recent budgets been the subject of some significant which have had a big impact on the sector, landlords in particular: the removal of mortgage interest relief, the imposition of a stamp duty surcharge and other measures which make the business of landlords more difficult.
Research shows that the demand for rental accommodation in the PRS will continue to increase. Many people still like the flexibility that private renting offers, while getting on the housing ladder, with asset prices continuing to rise as they are, will always be a struggle for many young people.
Various government schemes have been introduced to encourage greater institutional investment in the PRS but the evidence to-date shows that this is having the desired results.
The Residential Landlords’ Association (RLA) is suggesting that the government needs to support smaller landlords, to encourage them to invest in new rental properties needed and, thereby, support local house builders.
The RLA also say they believe that “if the government acts to support landlords and the wider private rented sector this will help make renting better for all. We believe this can be achieved through the following 7 key policy changes:
Mortgage Interest Relief
The RLA believes the government should follow the example of Ireland and scrap the planned changes to mortgage interest relief, or at the very least, apply this only to new borrowing for new purchases in the sector.
Stamp Duty Land Tax Levy
We believe the government should abolish the new three percentage point stamp duty levy. However, the government has predicted an extra £3.1 billion in additional revenue through this change and the government has insisted that they will not change this policy. Therefore, we are pushing for the government to not apply the three percentage point stamp duty levy on properties that add to the overall net supply of housing.
The RLA believes the government should remove the anomaly that means that VAT can be reclaimed on goods and services in connection with the construction of a new dwelling when it is intended for owner occupation, but not when it is constructed to rent out.
Capital Gains Tax
To support the Government’s home ownership ambitions, landlords could be encouraged to sell properties to sitting tenants by applying the new 20% rate of Capital Gains Tax in such circumstances. Measures could be put in places to prevent abuse.
Small Plots for Private Renting
The government should encourage local authorities and public bodies, such as the Ministry of Defence and the NHS, to identify and sell off small plots (suitable for up to five units of accommodation) of unused public sector and local authority controlled land for development by the PRS.
Energy Efficiency of the sector
Following the decision to end the Green Deal, a review is needed to consider the financial capabilities of landlords to meet the new energy efficiency requirements coming into force in 2018. We believe the government should support landlords to make properties more energy efficient, by making improvements tax deductible.
We are supporting calls made by Crisis for modest funding to improve access to the private rented sector for the homeless.”
— LandlordZONE (@LandlordZONE) February 9, 2017