THE forthcoming Budget is an ‘open goal’ for the Chancellor to encourage investment in the UK’s Private Rented Sector (PRS) and support growth in the economy according to the Association of Residential Letting Agents (ARLA) as they meet for their annual conference.
In their Budget submission to the Chancellor, ARLA has urged the Government to support growth in the Private Rented Sector and remove prohibitive barriers to further investment.
Ian Potter, Operations Manager at ARLA, said: “Landlords must be treated as the entrepreneurial businesses they have now become. Supporting growth and encouraging greater investment into the private rented sector will help boost our economy and is an open goal for the Chancellor.”
“Demand for private rented housing continues to grow, with 3.4 million tenants living in the private rented sector – an increase of over one million tenants since 2005. The tax system can be used by the Government to incentivise investment in housing stock in the PRS, and therefore improve the conditions in which those 3.4 million tenants live.”
ARLA’s Budget submission calls on the Government to encourage investment in the private rented sector by:
• Treating rented property as an entrepreneurial business activity for Capital Gains Tax purposes;
• Re-introducing roll over relief for landlords looking to reinvest in the private rented sector;
• Re-assessing the “slab” structure of Stamp Duty to create a fairer system.
Ian Potter continued: “Landlords play a vitally important role in providing housing in the UK, however, they are not treated as businesses by the Treasury and therefore can’t take advantage of tax relief available to other SME’s when looking to reinvest in their portfolio. Some landlords face tax bills of up to 28% when selling a property, preventing them from reinvesting in the market.”
ARLA has called on the Government to allow landlords to take advantage of the same level of roll-over relief available to other businesses when reinvesting in the private rented sector, and to only charge CGT on gains released from a business as profit.
Mr Potter also suggested the Government reforms the outdated structure of Stamp Duty Land Tax, saying: “The dampening effect of Stamp Duty on the housing market recovery is recognised across the industry. The current ‘slab structure’ distorts the UK housing market and takes money out of the pockets of homeowners in a totally unfair way. Now is the time for the Government to modernise the duty to move away from the current ‘slab’ structure to create a fairer, more logical system. “