Private rental sector needs ‘radical’ tax reset to solve supply crisis – LandlordZONE

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It has been revealed that reinstating mortgage interest relief for homeowners would solve the nation’s ongoing rental property supply crisis and raise £400m for the nation’s coffers.

Analysis by Capital Economics on behalf of the National Association of Residential Owners showed that reinstating MIR would help add another 110,000 properties to the private rental sector PRS as investors return to the market.

“Homeowner tax increases, exacerbated by rising interest rates, have deepened the supply crisis. And as this investigation shows, the situation is unlikely to improve until it is reversed,” says NRLA CEO Ben Beadle (pictured).

“A sweeping rejection of these harmful policies is necessary to help stem the tide of lost rental properties, limit rent increases, and increase Treasury revenue.”

Capital Economics also found that removing mortgage rate reforms could reduce future rent inflation in the sector and reduce financial pressures on homeowners planning maintenance and improvements.

£1 billion

Is modeling (PDF download) also suggests, worryingly for ministers, that if the base rate remains above 2.5% for another four years as predicted, some 735,000 unprofitable properties are likely to be removed from the PRS and lead HMRC to lose £1bn in tax revenue

The NRLA calls on the Government to review the impact of recent tax increases on the private rental housing sector and the cost of access to rental housing.

He has criticized then-foreign minister George Osborne’s 2015 decision to cut the MIR, as the Institute for Fiscal Studies had previously argued that it is incorrect to suggest that homeowners have received more favorable taxes than homeowners.

“In 2015, the government said it wanted to ‘create a more level playing field between those who buy a house to rent and those who buy a house to live in,’” adds Beadle.

“In doing so, it increased costs for responsible landlords and completely ignored the burden it would create for tenants. “

In January this year some 40,000 people signed a parliamentary petition calling on the Government to reinstitate MIR.