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ARLA Propertymark's Autumn Statement

Wednesday 27 September 2017

Ahead of the Government's Autumn Statement for 2017, we share our proposals for the private rented sector which have been submitted to the Chancellor in preparation for the announcement which is expected on 22 November.

ARLA Propertymark is calling on the Government to reverse the recent 3% Stamp Duty surcharge for buy-to-let properties, and revoke the Mortgage Interest Relief changes that has resulted in the costs of running a landlord business sky-rocketing. This will only get worse in the run up to when the tax relief level reaches its minimum in 2021.

We argue that the increased costs associated with letting properties out, will harm tenants in the end, with costs being passed onto tenants, which will also have the knock-on effect that they will find it even more difficult to put away their cash in order to save for a deposit to buy their first home. This goes against Government promises to help people buy their first home.

Landlords should be treated like any other business. The vast majority provide a valuable and professional service, so they should be subject to the same tax laws as any other business that provides a service. The days of money made from letting out properties being classed as 'unearned income' should be numbered.

Businesses in other industries benefit from roll-over tax relief and we think this should also be available to landlords who reinvest in the private rented sector, and that Capital Gains Tax should only be charged on profits that aren't reinvested. Introducing such changes could also benefit tax revenue for the Chancellor and increase the fluidity of the property market bringing more choice for others across the property market demographic.  

We would also like to see the Chancellor cut VAT on materials and labour costs to encourage investors to take on older properties that may be derelict, which would in turn go some way to help the empty home crisis. 

Energy efficiency 

To help landlords comply with the Government’s new energy efficiency measures, its vital that there are avenues in place to help landlords with the considerable costs involved - on average, nearly £7000 per property*. One option available to the Government is to reintroduce the Landlord Energy Saving Allowance (LESA). 

Protecting tenants

Of all the elements that the forthcoming ban on fees will bring, the most contentious one for us is reference checks. If lettings agents are prevented from charging referencing fees, it could be detrimental to those tenants who need most protection. It's crucial that tenants don't take on more financial burden than they can afford. One of the safeguards in place to prevent this is referencing checks and in our representation we explicitly make this point to the Treasury.

The problems that the current Universal Credit system brings, such as increases in rent arrears and evictions, has been widely reported, but measures have still not been taken to address the main issues. We argue that to help resolve some of these issues, tenants should have the option to get the housing element of Universal Credit paid directly to their landlords and 45% of ARLA Propertymark Protected agents agree. 

On the wider issue of how the Government's combined policies are affecting lettings agents across the board; letting agents deliver a hugely valuable service and fees cover the costs of ensuring a tenant’s home is safe, legally compliant and professionally managed. If letting agents leave the sector, some landlords will likely be unaware of new (and existing) legal requirements, potentially causing widespread non-compliance and putting tenants in danger. This will likely cause added pressure on local authorities as tenants look for assistance.

Commenting, David Cox Chief Executive of ARLA Propertymark, said:

“As the private rented sector is left to house the nation the Chancellor must look at whether current policies are helping or hurting. We know that the proportion of letting agents seeing landlords raising their rents has reached a two-year high. Unless the Chancellor changes course landlords are likely to continue to shift the burden of recent tax and regulation changes on to their tenants.” 

View our full submission

View the ARLA Propertymark Private Sector Report – August 2017