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Leading estate agent has warned additional taxes on landlords proposed by Labour leader could leave tenants worse off than National Insurance rise.
Dominic Agace, chief executive of Winkworth estate agency has responded to calls from Labour leader Sir Keir Starmer for further tax penalties on landlords.
In his speech, made to the Local Government Association conference, Starmer was addressing Boris Johnson’s tax approach to raise National Insurance tax in 2022 and 2023 to cover the costs of an NHS backlog and need for social care.
Starmer described this approach as “unfair” and “poorly thought through”.
Instead he proposed: "The money could have been raised by taxing the incomes of landlords, and those who buy and sell large quantities of financial assets, stocks shares"
In response to this, Agace urged the Labour leader to consider the ramifications of taxing landlords further.
“This could push landlords to sell off more properties, reducing supply and leading to rent increases - which would be more costly to working people needing to rent than the 1.25 per cent rise in National Insurance.
"A healthy private rental sector is essential and landlords can't be pushed much further in areas such as London where yields are already very low and rents have declined significantly as a result of the pandemic."
Supply and demand
With demand for rental properties already outweighing current supply, a sell-off from landlords could be detrimental to renters.
A new report from Zoopla shows that the rental properties that are available are letting almost a week faster than last year.
This is faster than previous records set in 2016, and is attributed to an out of balance supply and demand in the rental sector.
Currently, rental properties are securing tenants on average within 15 days of being put on the market.
However, some landlords are reporting applications within single days of listing their properties.
Whilst this is currently good news for landlords, as it allows rent to rise competitively in certain areas, Starmer’s alternative plans to increase tax on landlords could push this increase too far out of balance.
If the private rental sector doesn’t remain profitable to smaller landlords, some may choose to leave altogether, meaning the government would be faced with an increased housing crisis.
Dominic Agace’s solution to supply and demand issues instead lies with the treasury. He thinks that Chancellor Rishi Sunak should use the next upcoming budget to make it more attractive for landlords to invest in the capital.
“30 per cent of homes in London are in the private rented sector. Young professionals coming to work in London to build a career need to be based in the capital and it is critical that housing stock is here and affordable. It is important that they are able to come to ensure our continuing status as a global centre. There has to be a balance of fairness between tenant and landlord.”
While there is no one-size-fits-all solution to the issues that the NHS and care sector are coping with, it is clear that striking a balance between tenants and landlords will remain an issue as the Government decides its approach.