The Budget, on Wednesday 6 March, will contain a £300m tax raid on the private rental sector according to a report yesterday by The Sunday Times.

The publication stated: ‘The Chancellor (Jeremy Hunt) is to launch a £300m tax raid on second home owners who make money from holiday lets in an attempt to make the (income tax cut) sums add up. He will abolish a series of tax perks for landlords who rent out their properties to short-term holidaymakers rather than long-term tenants.

‘Although it represents another tax grab by the Conservatives, Hunt will argue it will help tackle the housing shortage in coastal areas and holiday hotspots such as Cornwall and the Lake District, where landlords are converting to holiday lets to benefit from generous tax perks, depriving local people of housing.’

Industry thoughts on what should be in the Budget

The National Residential Landlords Association (NRLA) has told the Government it must fix the broken housing benefit system. In total, 1.5m households renting privately in Britain receive Universal Credit which includes support for their housing costs, known as the Local Housing Allowance (LHA).

However, an analysis of government data by the NRLA suggests that two thirds of this group – 64%, nearly 1m households - have a shortfall between their LHA payment and their monthly rents. The picture is set to worsen, given that LHA rates are due to be frozen again after April.

The NRLA is calling on all parties to provide certainty to renters and responsible landlords by ensuring housing benefit rates remain pegged to at least the lowest 30% of rents throughout the next Parliament.

Ben Beadle, chief executive at the NRLA, says: “It is time to fix the broken housing benefit system once and for all. The repeated freezes of the support available and the lack of clarity about rates in the future is causing insecurity and anxiety for renters and landlords alike. It is making it impossible for anyone to plan for the future.

“All parties need to commit to ensuring housing benefit rates permanently track average rents. This would end the bizarre and morally absurd spectacle of the support available being completely detached from the cost of housing for renters.”  

Meanwhile, Pocket Living has written to the Chancellor, outlining what it believes are six key policy and financial ideas to arrest the decline in UK housebuilding and help more young people onto the ladder.

Below are a summary of its proposals:

• Go further on promoting a brownfield-first agenda through the adoption of a fully permissive planning regime for small sites. This would be through a presumption in favour of development for sites of less than 0.25 hectares where threshold levels of affordable housing is provided.
• Provide greater financial support to the SME developer sector through equity funding from Homes England to broaden the range of housebuilders and encourage the delivery of more homes.
• Implement an urgent funding package to add capacity to the construction sector and boost the number of new joiners to the industry via an intensive upskilling programme.
• Greater tenure flexibility on new developments to encourage the provision of discount to market sale products in place of more traditional shared ownership.
• Consider partial reform of Inheritance Tax and gifting to encourage parents and grandparents to fund deposits for their children and grandchildren to purchase their first home without fear of the tax implications.
• Consider fiscal incentives to encourage downsizing after a certain age, which would free up much needed family housing.

Marc Vlessing, CEO at Pocket Living, comments: “We believe that, with a fairer and faster planning system and more support for SMEs, we can accelerate the delivery of affordable homes.”

Lastly, The Mortgage Works - Nationwide’s buy-to-let lending arm - is asking the Government to use the Spring Budget to introduce four key actions that will help build a stronger PRS. They are:

• A moratorium on all but essential new regulation in the PRS following the introduction of the Renters (Reform) Bill.
• Incentivise landlords to carry out energy efficiency work, allowing energy performance improvements to be deductible against rental income for tax purposes.
• Increase funding for social housing. The Government should ensure appropriate funding is available to deliver the additional 90,000 homes per year into the social housing sector.
• Review changes to mortgage interest relief and landlord taxes, as well as reviewing the additional 3% that landlords have to pay on top of their normal stamp duty payment. This cost acts as a barrier to new landlords entering the market, which would provide additional properties.

Damian Thompson, director at The Mortgage Works, says: “Landlords are a partner for the private sector and the Government in driving the economy forward. The private rental sector provides homes for where the UK workforce is needed most. However, the current taxation system is counterproductive, hampering progress within the UK economy, and negatively impacting tenants and landlords.”