Propertymark says Section 24 tax change is fuelling the rental crisis

Propertymark says Section 24 tax change is fuelling the rental crisis

0:02 AM, 5th August 2024, About 4 months ago 4

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A government policy intended to level the playing field for landlords has instead sparked a crisis in the private rented sector (PRS), new research from Propertymark reveals.

Section 24, introduced in 2015, restricted tax relief on mortgage interest payments for buy to let investors.

While designed to reduce property speculation, the measure has had far-reaching and unintended consequences.

Now, a report, ‘The Impact of Section 24 on buy-to-let landlords in England’, reveals what the impact has been.

Branded Section 24 ‘unfair’

Propertymark found that landlords overwhelmingly branded Section 24 ‘unfair’, equating the removal of interest rate relief with being taxed on turnover rather than profit.

While technically incorrect, as some relief remains, Propertymark says the policy has significantly eroded the financial viability of many rental properties.

The report found that Section 24, coupled with rising interest rates and the cost-of-living crisis, has pushed many landlords into financial hardship.

Some landlords have sold properties, others have converted to limited companies, and many have increased rents to offset higher costs.

‘Section 24 has had a substantive impact’

“The financial predicament landlords face cannot be solely attributed to the introduction of Section 24,” the report acknowledges. “However, Section 24 has had a substantive impact on many BTL landlords.”

The report also finds that the consequences of S24 for tenants are stark.

It found a dwindling supply of rental properties has driven up costs, while landlords, under financial pressure, are cutting back on maintenance.

This could lead to deteriorating housing conditions and increased safety risks, the report claims.

Urging policymakers to reconsider Section 24

In its conclusion, Propertymark is urging policymakers to reconsider Section 24 and implement measures to attract new landlords and keep existing ones.

This includes reducing taxes on additional properties, cutting capital gains tax thresholds, and removing stamp duty on PRS properties transferred into limited companies.

“We recognise the critical role that private landlords play in the delivery of a functioning and stable PRS,” the report states.

It adds: “Policymakers should consider policies which attract new and retain existing landlords within the sector.”


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TheMaluka

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7:57 AM, 5th August 2024, About 4 months ago

What do Propertymark, Estate Agents and Landlords know about rental property compared to a plethora of Housing Ministers?

TERRY DAVIS

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14:57 PM, 5th August 2024, About 4 months ago

"Plethora" meaning an unhealthy abundance, is exactly the correct adjective to apply to Housing ministers. There's no chance this bunch of idiots, who are obsessed with stealing as much tax as possible to fund their SJW and climate activism will help the PRS, as we're on their 'soak the rich' list, despite many of us landlords scraping along the bottom.

PAUL BARTLETT

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9:06 AM, 6th August 2024, About 4 months ago

"While technically incorrect, as some relief remains, Propertymark says the policy has significantly eroded the financial viability of many rental properties."

If Propertymark expect to be taken seriously they must do the numbers to show what relief remains.

John Parfett

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8:53 AM, 10th August 2024, About 3 months ago

I still cannot believe Section 24 became law. It is so obviously wrong on such a fundamental level.
“Let’s pick a business & not allow it to claim all of its real finance costs as an expense.”
When I read those words & realise they’re true in this country I despair.

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