Government Encouragement Sought For Landlord Entrepreneurs

The Association of Residential Landlords (ARLA) says the forthcoming budget is an “open goal” for the Chancellor to encourage investment in the UK’s private rented sector (PRS) and support growth in the economy. In ARLA’s budget submission, the body has urged the government to support this growth by removing prohibitive barriers to further investment. This article shows how the government and other bodies recognise and support the private rented sector; and how the continuing growth and high demand underpins investor security in the PRS market.

Tax system can be used to incentivise PRS investment

Ian Potter, operations manager at ARLA, tells us: “Landlords must be treated as the entrepreneurial businesses that they have now become. Demand for private rented housing continues to grow, with 3.4 million tenants living in the private rented sector – an increase of over one million tenants since 2005. The tax system can be used by the government to incentivise investment in the PRS and improve the conditions in which those 3.4 million tenants live.”

Landlords play a “vitally important role”
He continues: “Landlords play a vitally important role in providing housing in the UK, however, they are not treated as businesses by the Treasury and therefore can’t take advantage of tax relief available to other SMEs when looking to reinvest their portfolios. Some landlords face tax bills of up to 28% when selling a property, preventing them from reinvesting in the market.”

“We have called on the government to allow landlords to take advantage of the same level of roll-over relief available to other businesses when reinvesting in the private rented sector and to only charge Capital Gains Tax on gains released from a business as profit.”

Government to create a “fairer, more logical” stamp duty system
Potter concludes: “The dampening effect of Stamp Duty on the housing market recovery is recognised across the industry. The current ‘slab structure’ distorts the UK housing market and takes money out of the pockets of homeowners in a totally unfair way. Now is the time for the Government to modernise the duty to move away from the current ‘slab’ structure to create a fairer, more logical system.”

Government agrees PRS is crucial to UK housing and “top of agenda”
Terrie Alafat, director of housing growth and affordable housing at Communities and Local Government (CLG), agrees the private rented sector is crucial to UK housing. Terrie confirms: “It is an exciting time for the private rented sector. Housing is definitely at the top of the government’s agenda and the private rented sector is in the middle of all that.”