Propertymark is keen to see the Labour Party commit to the implementation of tax support for the private rented sector as part of its review into this matter. The Labour Housing Group is due to issue its Independent Review of the Private Rented Sector on Wednesday 15 May at the Local Government Association in London at 4pm. The review has been a long time in the making as Councillor Stephen Cowan, Leader of the London Borough of Hammersmith & Fulham, announced in January 2023 that he would be leading a comprehensive examination of the private rented sector for the Labour Party to prepare for changing private renting in practice.
Any potential proposals will be formed with assistance from professional bodies, academics, policy thinktanks, trade unions, renters’ groups, and politicians, and should be capable of ‘transforming’ the private rented sector in the UK. The party have previously stated their aims are to provide tenants with more ‘choice and control’ over their properties, alongside ‘greater security’, ‘the right to make their home their own’, and to ensure all homes are suitable for ‘human habitation.’
In February, Angela Rayner, deputy leader of the Labour Party, pledged to extend Awaab’s Law,named after two-year-old Awaab Ishak died from a respiratory condition caused by prolonged exposure to mould in a Rochdale social flat, to the private rented sector.
Ever since then chancellor George Osborne reduced the available tax relief on mortgage interest costs, Propertymark has long supported a reversal of this policy due to its impact on investors not being able to offset any finance costs against tax liabilities, which then has potential to push rents higher as landlords need to break even with increasing costs.
Before the 2015 changes, landlords could once claim tax relief back at their marginal rate, which meant that basic, higher, and additional rate payers could receive tax relief at 20 per cent, 40 per cent, or 45 per cent respectively. By 2020-21 onwards, they have only been allowed to apply for tax relief at the basic rate, regardless of whatever rate of tax they pay.
Also, gross rental income now counts towards taxable income pushing more landlords into higher and additional rate tax brackets although they never see this income. Unfair taxation forces landlords to leave the market and creates a supply/demand imbalance resulting in higher rents which we are witnessing across the country.
In its 2019 report Private rented sector costs: property maintenance and rent controls, the professional body discovered that maintenance costs were worth £1,000 a year, with 68 per cent of agents stating that they had paid for an expensive repair beyond their everyday maintenance costs.
Furthermore, a 2022 Propertymark report titled A shrinking private rented sector, found that 53 per cent of buy-to-let properties sold in March 2022 quit the private rented sector and there was a 49 per cent reduction in properties available to rent per member branch in March 2022 compared to March 2019, which also leads to a surge in rental costs due to more demand for existing supply.
Greg Tsuman, ARLA Propertymark President, said:
“We welcome the independent review of the private rental sector and hope that lessons have been learned from past mistakes. We need to encourage responsible housing providers into the market instead of driving them away through ineffective taxation, which in turn causes rents to rise. We want tenants to have choice and security. And this will be possible only if there is a balanced marketplace with enough rental housing to meet growing demand. We need to improve enforcement to drive bad landlords out and provide support for good responsible housing providers.”
