Chancellor George Osborne should give student landlords more tax breaks to encourage them to invest and expand their businesses, claims the Residential Landlords Association (RLA).
The RLA is urging the Chancellor to change the tax status of private residential letting businesses in the upcoming Budget (March 21).
Scrapping the current rules that treat a property letting business as an investment would give landlords extra cash to provide more accommodation at a better standard.
The RLA wants:
• Capital gains tax roll-over when selling a rental home to a first time buyer or when reinvesting the sale proceeds in purchasing another home to let
• Change the rules for self-invested pension plans (SiPPS) to allow funds to buy residential rental property
• To change capital allowances rules to include residential letting property - this offers tax relief on improving or upgrading properties that are only available to commercial premises
The RLA reckons a report commissioned last year from Reading University tax expert Professor Michael Ball showed treating rental property as investments for tax rather than as a business leads to landlords paying an average £1,000 in extra tax per rental property each year.
The RLA reckons the Chancellor would not lose any tax by following their suggestions - the money would be made up by landlords with larger portfolios paying more income tax, while spending more on refurbishments.
Chairman Alan Ward said: “With rapidly increasing demand for rented accommodation and a supply shortage driving up rents, there is a real need for changes to the tax treatment of the sector to encourage it to invest. It is a nonsense that when landlords are running a business, that they should be hampered by a tax system that treats them as investors.
“Our proposals for change are cost neutral as they recognise the revenue that will flow from income to new and larger landlords and that every £1 invested in the sector provides a return to the economy of £3.50 through expenditure on building work and furniture."
