The government could potentially raise a massive £10 billion if it made the decision to scrap the new tax levied on properties bought with the intention of renting them out, says economic consultancy Capital Economics.
According to the report, removing the additional levy of 3% on stamp duty could result in an extra 900,000 new properties available for buy to let in the UK, over the next decade.
The analysis, by Capital Economics, suggests that the increase in corporation tax receipts and tax on increased income, to the Treasury, would lead to a boost of £10 billion over the next ten years. These increased revenue streams are expected to continue beyond that time period, providing that landlords do not sell their buy-to-let properties at a later stage.
The research, commissioned by The National Residential Landlords Association, has urged the Chancellor of the Exchequer to consider the removal of this additional levy in a bid to tackle the ongoing problem of the lack of supply of rentable properties in the UK.
The report warns that if the number of properties inhabited by owners as well as social housing continues to grow at the ten year average rate, this would inevitably lead to an increased requirement for more rental properties to be made available on the market. It suggests that there would be a demand in excess of 230,000 new homes in the private rental sector needed every year, in order to meet the government targets, set out for the next ten years.
Even if the rate of growth of other housing tenures doubles, there would still be a demand for an additional 100,000 private rental properties over the next decade. With most young people renting before buying, when either leaving home for the first time or going to university, it is imperative that there are properties available for them to rent. The 15 to 24 year age group is predicted to grow by 11% (866,000) by 2030, meaning demand will only increase.
Capital Economics advises in their report, that unless these tax changes are made along with other policies for the buy-to-let market, that the lack of supply will continue and could even reach as many as a shortage of around 500,000 rental properties over the next ten years.
Chief Executive of the National Residential Landlords Association, Ben Beadle, commented:
“The Government needs to wake up to a crisis of its own making. Taxing landlords out of the market serves only to cut supply, increase rents and make home ownership more difficult to afford.
“The evidence clearly shows that the supply of rented housing is declining as demand increases and will continue to do so. The Government is taking a blinkered approach to the issue, which is not helped by its reluctance to admit mistakes it has made in the past.
“It makes no sense to tax the supply of new homes supplied by landlords investing in new build or bringing empty homes back into use. As this study indicates, removing the tax will actually generate more revenue, not less.”
