Chancellor Phillip Hammond (GETTY Images)
LANDLORDS have been told they face no further tax changes in the 2017 budget, with several key announcements promising to impact the property and lettings industry as part of a £44 million package.
Over the recent budgets landlords have been imposed with various tax changes, most notably the reduction of claimable tax relief alongside a three per cent stamp duty surcharge.
In Chancellor Phillip Hammond’s speech, landlords were encouraged to focus paving the way for longer tenancies. He said: “We will launch a consultation on barriers to longer tenancies in the private rented sector, and how we might encourage landlords to offer them to those tenants who want the extra security.”
The longer tenancies are being backed by industry experts, particularly if they’re combined with attractive tax perks, such as tax relief for landlords offering those deals. This would see a reversal to the current policy, where landlord’s claimed tax relief is being reduced up until 2020, replaced with a 20 per cent tax credit. In another pledge to encourage long-term tenancies, the government have promised to establish how rent-a-room is being used.
Additional good news for landlords falls on the subject of tenant’s rent, with tenants being encouraged by the government to meet their rental payments on time. In the speech, it was promised that the government want to ensure first-time buyers’ history of paying their rent on time is recognised in credit scores and mortgage applications.
The Residential Landlords Association, (RLA) welcomed some of the announcements including changes to the troubled Universal Credit roll out, as well as rent payments featuring in credit scores; however believes the Chancellor missed a golden opportunity.
It believes a chance to help tenants and landlords hoping to support the government in its objective of providing longer tenancies for those looking for security, has only been presented as a ‘consultation into barriers’.
David Smith, Policy Director for the RLA said: “With ever growing numbers of families with children in private rented housing we recognise their needs for longer tenancies.
“Today’s Budget could have acted on proposals we have made by providing tax relief for landlords prepared to do so and taking action against mortgage lenders preventing longer tenancies being provided.
“Instead we have yet another consultation adding to the 15 already ongoing as related to the private rented sector. Tenants cannot live in consultations.
“The renewed focused on corporate money in high rise city centre rental property also neglects rural areas and towns, and fails to support the majority of landlords who are individuals and can provide the dynamism the rental market desperately needs.”
Welcoming moves to include rent payment history in credit scores David Smith added:
“We welcome the Government’s acceptance of RLA recommendations to include rent payment history when calculating credit scores.
“This is good for tenants wanting to access mortgages themselves and good for landlords in better understand the background of prospective tenants.”
Other housing announcements
Other property related subjects in the speech covered the topic of empty home premiums, with local authorities being granted the power to increase council tax premiums on unoccupied properties from anywhere between 50 – 100%.
Empty homes could soon have their council tax premiums driven up by 100%. (Image by geograph.org).
First time buyers are perhaps the highest benefiting group from the Budget with a promise for stamp duty to be scrapped on properties below £300,000. Addressing the commons, Mr Hammond said ““When we say we would revive the home owning dream in Britain, we meant it”. The move would cut the tax by 95 per cent for first time buyers, whilst 80 per cent would have the tax abolished entirely. Alongside the push to get first time buyers into homes, the government have pledged to build at least 300,000 new homes per year by the mid-2020’s, the highest amount since the 1970’s.
The next bid is to crack down on ‘land banking’ preventing land being claimed for commercial usage with no immediate result. An investigation carried out by The Guardian in 2015 suggested the UK’s largest property builders owned up to 600,000 plots of land with planning permission, yet no work was being carried out. Land traders were also noted for buying land, waiting for several years before applying for planning permission and then selling it on at vastly inflated prices.