The Residential Landlords Association (RLA) has called on the Government to delay its forthcoming tax changes for buy-to-let landlords, following the release of figures that show higher than forecast Stamp Duty revenue as a result of last year’s surcharge introduction.
Since April 2016, purchasers of rental properties and second homes have been charged an additional 3% in Stamp Duty. At the time, the Government predicted that the surcharge would raise an additional £630m in the first year.
However, figures published yesterday from HM Revenue & Customs (HMRC) show that in just the first nine months, the tax hike had brought in £1.19 billion – £560m more than forecast for the whole year. If this rate continues, the RLA warns that revenue for the year will exceed £1.58 billion – almost £1 billion more than projected.
In November, the Office for Budget Responsibility predicted that, in its first four years, the surcharge would raise £3.1 billion more than expected.
The RLA is calling on the Government to use this extra revenue to scrap planned tax changes to the amount of relief that landlords can claim on finance costs, and prevent investors from leaving the sector or increasing rents.
One RLA survey found that 58% of landlords are considering further reducing investment in rental properties because of the tax changes. Some 66% of investors feel the tax changes will place upwards pressure on rent prices.
At the very least, the RLA believes that the Government should delay the introduction of the restriction, which is planned for April, to enable a better assessment of the likely impact of the tax changes to be conducted.
The Policy Director of the RLA, David Smith, says: “In raising nearly twice as much in just nine months as the tax was predicted to make in one year, this Stamp Duty windfall gives the Government a chance to back the rental market and support the development of new homes, which we desperately need.
“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first time buyers out of the market. Assessments by the Institute for Fiscal Studies and the London School of Economics contradict the Treasury’s position completely. It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected.”
He continues: “The Government has received far more money than it expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.”
Do you support the RLA’s call for a delay in the introduction of the tax changes?