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ARLA submit views to HM Treasury for Spring Budget

Wednesday 01 February 2017

Last month ARLA submitted its views to HM Treasury for the Chancellor’s Spring Budget that is due to take place on Wednesday 8 March 2017.

ARLA has provided the Treasury with key analysis on the state of the private rented sector and commented widely on current government policy. Central to ARLA’s lobbying is that the growth of the private rented sector has led to a greater focus on property conditions, but current government policy does not reflect the various types of landlord involved in the private rented sector and the different incentives they need to invest.  

Here are ARLA’s suggested new policy ideas that we believe the Government should be taking on board:

  • Revoke SDLT and mortgage interest relief changes – increasing the taxation burden on landlord’s results in these costs being passed back to tenants through rent rises. 

  • Treat letting property as a business activity for tax purposes – landlords should be able to take advantage of the same level of roll-over relief available to other businesses when reinvesting in the private rented sector and the Government should reduce the rate of Capital Gains Tax (CGT) for selling residential property to the same 20 per cent rate as CGT on all other gains.

  • Provide incentives to improve property conditions – the Government should reduce VAT on the purchase of materials and labour to improve older property brought onto the rental market and allow improvements to be offset against rental income rather than CGT.

  • Energy Efficiency – the Government should introduce the Landlord’s Energy Saving Allowance (LESA) and extend it to include anything contained within the Recommendations Report of an Energy Performance Certificate (EPC) to help landlords with the cost of energy efficiency improvements to their properties and comply with the Minimum Energy Performance Standards (MEPS) regulations for the private rented sector due to come inforce in April 2018.

  • Encourage institutional investors into the private rented sector – more institutional investors should be encouraged into the residential property sector with local authorities including them in their housing strategies and making available unused public sector land through the planning process where possible.

  • Introduce Government regulation of letting agents – full mandatory Government regulation of sales and letting agents is the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market. 

  • Ban upfront fees to tenants – The Government should ban upfront fees to tenants, allowing agents to spread the costs associated with these essential services over the first six months of the tenancy. By spreading the costs of these services over the first six months of the tenancy, it will force agents to consolidate all charges into a single monthly sum that is can be easily and transparently displayed. This will allow tenants to see exactly what they will be expected to pay and make it easier for them to compare agencies.

The message from ARLA is clear: more and more legislative change from various government departments and devolved administrations are attempting to professionalise the industry. Yet letting property is not treated as a business for tax purposes and instead classed as unearned income. 

Whilst the housing shortage continues with not enough homes being built each year, landlords are becoming increasingly important to those who need a safe and secure place to live. Not everyone can own their own home and the Government must recognise the importance of the private rented sector.

Read ARLA’s response here