Reversal of Section 24 of the Finance Act
Propertymark is again calling on the UK Government to look at landlords as a small business and to allow them to claim 100% of their mortgage interest when filing their tax returns. When George Osborne removed mortgage interest relief in 2015, the costs for landlords increased significantly, which acted as a disincentive for people considering investment in the private rental sector.
Section 24 is often referred to as the ‘Tenant Tax’ because the higher tax on landlords impacts their profit levels, increases their costs and results in higher rents for tenants. While many landlords do their best to keep rents down, the increased pressure from current interest rates has led many to raise rents simply to cover costs.
Additional rate SDLT holiday for the PRS
We propose a 12-month suspension of the 3% stamp duty land tax premium for landlords purchasing buy-to-let properties. This would help to incentivise new investors to join the sector.
At present, someone buying an additional property for £290,000 (the average UK house price) to rent out would pay £8,700 more SDLT than someone buying the same property as their main home.
Reducing the tax burden on landlords would help alleviate the significant, ongoing shortage of housing stock in the private rented sector, bring down rents, and support growth across the economy.
Expand the First Homes scheme
The scheme supports first-time buyers to purchase a home for between 30% and 50% less than its market value. However, the scheme limits choice to new builds purchased through the developer or homes previously sold through the scheme which come up for resale.
We believe the First Homes scheme should be expanded to include the second-hand homes market - which we recognise would be expensive at a time when the Treasury has limited resources.
Therefore, we recommend that the UK Government should pilot the scheme expansion in areas where they are already planning to encourage growth and levelling up. If the scheme is successful, it could then be rolled out across England.
Tax reform to support for last time buyers
We are also calling for the abolishment of stamp duty land tax for all property purchases made by buyers aged over 55.
The English Housing Survey 2020-21 found a significant increase in the number of households which included someone over 65 who owned their home outright - up from 4% in 2010 to 75% in 2020. Whilst demand for family houses continues to far outstrip supply, many older people live alone or under occupy large homes.
This measure would remove a major barrier to downsizing amongst older homeowners, allowing them to move to a home that was more appropriate for their needs, whilst freeing up larger properties for younger families.
