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Category: government and politics
Housing Minister, Michael Gove, told landlords that he had been in early talks with HM Treasury, discussing options regarding tax incentives.
At the annual conference for National Residential Landlords Association (NRLA) in Birmingham on Tuesday 24th October, Gove clarified the Government’s position is against reinstating mortgage interest tax relief (MIR), but opened the door for ‘other proposals’ regarding tax incentives.
Landlords used to be able to deduct their mortgage interest from their income when calculating their taxes, however this was changed under the then Chancellor, George Osborne, in 2015.
This made renting out property less profitable than it once was.
With property prices still historically high, and interest rates driven up by increases in the Base Rate, many have argued that one way the government could ensure that landlords stay in the market is to bring back MIR, or a version of it.
Gove opened the door for tax incentives after NRLA CEO Ben Beadle, among others, quizzed him on whether the Government planned to reinstate MIR.
The Housing Minister recognised the need for landlord tax relief, but clarified that the Government would not reinstate the older version of MIR, saying:
There are two factors in play here [to explain why the Government won’t be reinstating MIR] – one is that many older landlords have properties on which they had relief; and why should a landlord have a more favourable tax regime than those seeking to buy properties as a home for themselves?
However, he also said:
[MIR is] very expensive but I am conscious that keeping the private rented sector healthy is important and while we have no plans to restore MIR we will look at how the tax regime can support responsible landlords.
And we are in discussions with the NRLA and other MPs and the Treasury about what can be done.
I can’t make the promises on tax that so many of you here would dearly like to be given, but we do listen to other proposals that might be able to help.
The NRLA annual conference came as it was announced that the long awaited ‘no fault evictions’ Renters Reform Bill had passed its second reading – with the caveat that the Bill would not be implemented until the courts process for repossession are reformed.
The Housing Minister told those attending that a healthy private rental sector is a ‘critical’ part of the housing sector.
He said ‘the overwhelming majority of landlords provide an invaluable service’, and continued by stating the importance of making sure the courts process is sufficiently bolstered before Section 21 evictions are put aside.
Property lawyer, Gary Scott, partner at law firm Spector Constant & Williams, has said:
The Court system is already buckling under the weight of possession claims and would be unable to withstand the pressure of further contested claims, which would require substantial additional court time under the present system. It is therefore a practical and sensible step to link the implementation of the abolition of Section 21 to changes in Court efficiency and process.
What can we take from the annual conference?
While Gove has said that MIR will not be an option moving forward, it is very good news to hear that other forms of tax incentives may be available to them in the future.
What will certainly be reassuring to landlords is that Gove has said he has already spoken to HM Treasury on this topic, which implies he is both taking this issue seriously and actively looking for a solution.
With better tax incentives now open for discussion, and a more efficient courts system in the works, perhaps the fog is starting to thin for what a post-Renters Reform Bill landscape would look like.