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Denis Minns asks - Will Buy to Let attract another new tax?

Have you noticed how all the Downton staff are becoming Buy to Let Landlords? First Cookie is rolling out £300.00 for a country cottage now the Bates are looking to invest. His Lordship will no longer be the only Landlord in Downton.

 

While the 1920s saw legislation that changed the valuation and transferability of property and made it easier for ordinary folk to invest, the Housing acts in the 1980s made tenancies easier for a new breed of private Landlord. It seems now that everyone is climbing on the Buy to Let bandwagon. But are they doing the right thing? Can they be sure that there will always be tenants to rent their houses? Will the present regime of market rents and limited security of tenure be allowed to prevail?

 

We have heard that a Labour government would introduce a home ownership tax on high end houses. This misguided ‘Mansion Tax’ is as unfair as it is unworkable. It is unlikely to bring in much revenue and will distort housing markets but it assuages the envy of those who would like to live in such houses. Why then would such a Government not tax the rents received by those beastly Buy to Let Landlords, who as we all know have the sole aim of extracting the highest rents possible from their tenants. After all aren’t these rents being paid from a Housing Benefit bill soon to plunder some £20 billion from our public purse?

 

They might start by regulation, increasing Landlords responsibilities for repairs and compelling energy improvements to let homes. Unearned Income tax could be introduced targeted at rents from residential property. Caps on rents would follow limiting increases and then security of tenure would be tightened up effectively limiting Landlords ability to sell.

 

Tax incentives could be given to institutional Landlords to encourage volume lettings at less than market rents and planning agreements could support schemes let at discount rents to ensure that the markets continued to be supplied with houses for rent.

 

These measures would make renting more affordable and letting out a home more expensive. Private Landlords would be competing for tenants against subsidies offered by volume Landlords. House prices would buckle and the Government would claim it had reduced housing costs. In reality, value and transferability of property would be circumscribed, limiting opportunity for all but the wealthy.

 

Are these measures a future fiscal fantasy? They are actually the lessons of the past. Regulation, rent caps, security of tenure, unearned income tax, partial subsidies have all been introduced in the past in the interests of equality and they have all failed. Their reintroduction would return us to the days of Downton which was anything but equality. We need to reduce property taxes to allow more people to participate in the prosperity that property offers. 

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