The government should think again about punitive tax changes to the private rented sector after receiving greater-than-expected revenue from the three per cent additional homes stamp duty surcharge.
Last April, when the surcharge was introduced, the government predicted it would raise £630 million in the first year.
Figures published this week by HMRC show that in just the first nine months the tax had already raised £1.19 billion – some £560m more than forecast for the whole year. If this rate continues, revenue for the year will exceed £1.58 billion, nearly £1 billion more than projected, says the Residential Landlords Association.
The association also says that the Office for Budget Responsibility has predicted that in its first four years the extra levy would bring in £3.1 billion more than forecast.
The RLA is therefore calling on the government to use this extra revenue from the stamp duty changes to scrap planned reforms to mortgage interest relief and prevent landlords disinvesting or having to increase rents.
One RLA survey has found that 58 per cent of landlords are considering further reducing investment in their rental properties because of the changes. Some 66 per cent feel the tax changes will place upwards pressure on market rents.
At the very least, the RLA believes the Government should pause the start of the introduction, from April, of the mortgage interest changes to enable a better assessment to be undertaken of the likely impact of the policy.
“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first time buyers out of the market” says RLA policy director David Smith.
“Assessments by the Institute for Fiscal Studies and the London School of Economics contradict the Treasury’s position completely. It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected” he adds.
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