On 7 June 2022, Propertymark conducted a roundtable between the OTS and our Regional Executives which highlighted the extent to which the current taxation system is limiting the growth of the sector.
Dissatisfaction with recent reforms
Recent reforms such as increasing the rate of property tax on buy-to-let property, the withdrawal of tax relief on mortgage interests at the landlord’s marginal rate and maintaining capital gains tax for rented property at 28 per cent has reduced opportunities for small investors to enter the market.
Taxation must be used as incentives
Improvements made on properties are currently not tax deductible, in the same way that repairs and maintenance are
In light of proposed home standards requirements and energy efficiency requirements, taxation needs to be used to promote rising standards within the PRS.
Complexity of current procedures
Agents feel like Tax Collectors
Agents are not the right profession to offer qualified financial advice, this needs to be done by accountants. Landlords have taken many of the costs of agency off tenants in recent years and cannot take the burden of additional reporting without payment for that work.
Our conversations with the Office for Tax Simplification lay out some of the fundamental issues the sector has with the current taxation regime. We hope that the results of their call for evidence lead to discussions to deliver positive change for agents.
It is clear from our members that the taxation system is not working. The right incentives are not in place and too many costs are being put on landlords and agents, which are ultimately transferred to tenants. Alongside this, the outdated paper-based collection and calculation methods are causing unnecessary strain on agents and landlords.
Additional proposals
Any additional tax legislation should not be the responsibility of landlords or agents, but accountants. Ultimately, the sector needs a tax regime that promotes an environment where landlords benefit from investing in property.
In recently years, we have seen landlords exit the PRS due to legislative changes, which has been exacerbated by high property prices. If landlords do not exit the sector, the additional costs brought on by taxes are often passed onto the tenant, which would further price out people from the PRS during the current cost of living crisis.
