Landlords may be feeling rightly aggrieved over latest Government changes to the tax system. After many of us have voted for the boys in blue to keep the red peril out with their crazy talk of rent control and landlord licences we instead feel the cold metal between our should blades as the Telegraph put it that we have
been knifed in the back!
Higher CGT rates for landlords
The latest Budget has announced a hike in the relative capital gains rate paid by landlords. In effect it is not quite so bad. The latest changes actually reduce the CGT rate significantly from 18% to 10% at the lower rate. However, this reduction in rates does not apply to property and therefore landlords.
Cumulative impact of Government policy
The cumulative effects of the penal stamp duty rate, higher relative CGT rates for property and the removal of interest rate relief for higher rate paying landlords has felt like a thorough beating for landlords over the last couple of years after the election rhetoric indicating no or little action in the private rental sector.
Stepping back
Stepping back from my slight sense of betrayal by the latest Government action. If landlords look at what the Government are trying to achieve. Having lost control of the economic lever of interest rates (they can't raise them because of the threat of putting the entire economy into a tail spin) they are attempting to poor a dampener on the overheating property market particularly in London and the South East with more direct fiscal measures. The measures look to reduce the amount of investment by landlords through making it fiscally less attractive and at the same time raising additional revenue from landlords who are largely making record profits. If these tweaks around the margins of property taxation ensure that the economy stays on an even keel then reluctantly it is something that I may have to accept. In my mind it is far less restrictive and divisive than rent controls and a pointless mandatory licensing scheme #hobsonschoice.
In the north of England, the property market is far from overheating and the Chancellor's actions are likely to cause significant problems. Some landlords will get out of the market and very few will expand their portfolios. This will reduce the stock of housing for rent for people who are unable to buy. Rents might rise, but not if tenants don't have the money to pay.
ReplyDeleteThe problem in the housing market is that the total number of dwellings has not kept pace with the rising population nor demographic changes. Politically, it is much easier to demonise landlords than to get houses built.
Hi Tom, you are so right! Politicians keep on making the planning system more and more complicated and difficult to get through. Great for protecting the rights of the existing homeowners but not so good for those who are trying to get a property of their own. Both planners and landlords are the whipping boys of the politicians protecting the rights of property owners at the cost of those who remain disenfranchised. The problem is that politicians pander to us the electorate who want it all and promise the undeliverable just to get into power. More housing is the answer but nobody wants to take the hit!
ReplyDeleteYes they have.
ReplyDeleteBut between them and that Jeremy Corbyn facist bigot, I would choose them every time. With the latter we will end up with a Scotland type scenario where the private rental sector will die completely to be taken over by corp[orations and the state (Soviet style).