Iain Duncan Smith calls for landlord relief
The former leader of the Conservative Party Iain Duncan Smith calls for a rethink on financial penalties for landlords, highlighting their invaluable contribution to UK housing.
Iain Duncan Smith, has called on the government to stop “punishing” landlords and to rethink its stamp duty and mortgage interest relief reforms.
A swathe of punitive legislation has created an atmosphere of uncertainty and financial loss for many landlords.
Since April, tax relief on mortgage interest payments has been reduced to 75%, as part of a gradual initiative to phase this incentive out by 2020.
It will be replaced with a tax reduction, which will be calculated as 20% of the lower of; finance costs, not offset against income in the tax year; total taxable profits of the property business in the tax year, or; total income (excluding that from dividends and savings), exceeding the personal allowance and blind person’s allowance (if applicable) in the year.
Beleaguered buy-to-let investors have also been subject to a 3 per cent stamp duty surcharge since April 2016. Both policies were set in motion by former chancellor George Osborne.
Writing on the Conservative website last week, Duncan Smith expressed concerns that landlords were pulling back from the sector, given that housebuilding could not satisfy the UK’s housing needs.
It is time for us to reconsider the way we treat private landlords who buy houses to rent. A large number of them are talking about no longer buying to let, and they blame it on Osborne’s decision to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax, and to tax a landlord’s turnover rather than profits.
“This, they believe, has led to private landlords scaling back their operations or even leaving the sector altogether. We should all be concerned about this, because private landlords are a significant provider of the additional housing we need.
Duncan Smith suggested that landlords could be incentivised, rather than being “punished.”
He commented: “Despite what has been said and written, they’re not enormous property magnates, for the most part, but often people using the market to help provide retirement income in later life or assets to pass on to their children.
We are now in danger of missing the point, for what is certain is that even if we do achieve our house building target, there will still be a continuing growth in demand and a significant part of this will have to be available through private landlords. It is time to review Osborne’s tax changes on buy-to-let landlords.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.