Scottish landlords criticise Treasury over tax changes



John Blackwood
John Blackwood

Tax changes from the UK government could result in an increase in private rents and leave tenants facing homelessness, the Scottish Association of Landlords (SAL) has warned.

The organisation and the Residential Landlords Association (RLA), which together represent 30,000 private landlords across Scotland, England and Wales, launched an e-petition opposing the government’s Summer Budget Proposals to change tax relief on finance charges for private residential landlords, which attracted over 20,000 signatures.

The petition drew a response from the government which maintains the move will affect fewer than one in five landlords, that residential property is a passive investment like shareholding, and that the interest relief is unfair as it is not available to homeowners.

However, the RLA and SAL assert that the move will affect many more landlords and tenants than claimed, forcing up rents, cutting supply and damaging the private rented sector (PRS).

Scottish Association of Landlords chief executive, John Blackwood, said the government has “failed to do its homework”.

He added: “It is clear that these changes will affect many more landlords than suggested, and more importantly, many more properties and therefore tenants. By taxing gross profit many small landlords will be pulled into a higher tax bracket and others will be forced to pay tax when they have made a trading loss.

“We are disappointed that the UK government seems to have failed to understand the damaging affect this could have on the PRS across the UK. Recent surveys confirm that over half of landlords are considering raising rents as a result of this policy, while others are considering selling properties, leaving tenants homeless. The supply of private rented housing will shrink, forcing rents up further and leave already-struggling local authorities unable to cope with housing demand.

“In Scotland, the report recently published by the Commission on Housing and Welfare makes several very helpful suggestions that landlords, letting agents and investors can help tackle the strategic housing crisis and was broadly welcomed by all sides and political parties in Scotland. The report proposed measures such as involving private landlords in new-build programmes and attracting institutional investors to provide funds for new houses for the private rented sector, rather than just for house-buyers. The move by the Chancellor can only decrease the extent to which the PRS can and will invest in these ways in Scotland and we would urge the UK government to change its position.”

Alan Ward
Alan Ward

Alan Ward, chairman of the Residential Landlords Association, added: “The government continues to peddle the line that letting out residential property is a passive investment, while piling on new regulations and responsibilities like immigration checks, minimum energy efficiency standards and licensing. It is a false comparison. The letting of residential property needs to be recognised as the trading business it is and be allowed to offset legitimate business costs, including mortgage interest.

“Equally bogus is the comparison with homeowners. As the Institute for Fiscal Studies has demonstrated, buy-to-let landlords are already taxed more heavily than homeowners. Unlike homeowners, landlords pay income tax on rental profits and capital gains tax when a property is sold. If the government is going to make these sort of comparisons they should be honest and fair.” 

@scotlandlord

@RLA_News



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