NRLA wants Holiday Lets to be hammered the same way as BTL?

9:02 AM, 5th February 2021, About 4 years ago 55

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NRLA Clarification:

“Calling for long term-rental property to be taxed more favourably than short-term holiday lets is clearly not the same as saying they should be taxed the same. After all how could you favour one over the other if they were taxed the same?”

“A clear example is the proposal the NRLA put out in its press release- whilst the stamp duty levy would apply to the provision of new homes to rent adding to the overall supply of housing, it would continue to apply to those investing in new holiday lets. The NRLA also believes that the Chancellor should look at the way the sector is taxed in the round to ensure it has an advantage over short term holiday lets given the pressing need for long term rental properties. As Ben notes in his quote it is the impact of tax policies as a whole that are causing such supply problems. “

The NRLA press release says it: “Wants to ensure the tax system encourages the provision of longer-term rental property over short-term holiday lets. From April this year, the final phase of reducing mortgage interest relief for landlords to the basic rate of income tax will be completed. This measure does not apply though to furnished holiday lets. This has encouraged the removal of properties from the long-term market for use as short-term holiday lets.”

Ben Beadle, Chief Executive of the National Residential Landlords Association comments:

“To be taxing long term homes to rent less favourably than holiday lets is simply bizarre. It completely undermines efforts by the Government to encourage the provision of long term, secure housing.

“It is time for the Government to realise that its tax policies have created a shortage of rented housing. This can only mean higher rents and reduced choice for renters. This is not going to do much for the levelling up agenda.”

The National Residential Landlords Association is also calling on the Chancellor to scrap the 3% stamp duty levy on the purchase of homes to rent where landlords invest in properties that add to the net supply of housing. This would include developing new housing, converting large properties into affordable units, changing the use of a property from commercial to residential or bringing one of the almost 650,000 empty homes in England back into use.

This comes as the Royal Institution of Chartered Surveyors has concluded that rents will rise because of demand for properties increasing, whilst new instructions from landlords continue to “dwindle.”

Property website, Rightmove revealed that outside London asking rents increased in the fourth quarter for 2020 for the first time since 2011, leading to a record average of £972 a month. It warns that in the suburbs, towns and villages, available housing is lower than normal for this time of year, whilst demand is higher.

Ben Beadle said:

“To have a tax on developing new housing is completely nonsensical at a time when more is needed. Supporting growth in the private rental market, alongside all other housing types, would provide a significant boost to the economy in the midst of the COVID-19 pandemic. Research published last year suggests that landlords inject over £3.5 billion into local businesses across the UK.”

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Comments

Landlordinsider

11:02 AM, 5th February 2021, About 4 years ago

This is a mischievious headline! This isn't what NRLA have said. Clearly, they are asking for parity and more favourable tax environment to deal with the lack of supply of homes. And I'm pleased they are picking up this unfair issue.

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Carol

11:13 AM, 5th February 2021, About 4 years ago

The NRLA are just a money making organisation out to fleece the landlords. The problem is landlords are too diverse and there is no one organisation big enough or brave enough to stand up to the unfair policies the Government are dishing out. The only thing to do is walk. I am selling all of my properties as soon as they become vacant. Being a landlord now carries much too high a risk

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Chris @ Possession Friend

11:14 AM, 5th February 2021, About 4 years ago

Reply to the comment left by Landlordinsider at 05/02/2021 - 11:02Don't think its unfair at all, it quotes Beadle !
Campaigning for a pernicious Tax to be even more widespread is not in Landlords interests and not what you expect from a landlord Association.
Is your definition of parity, if you've punished most landlords, you should punish All of them ?

I wonder how many Holiday let landlords will be cancelling their membership ?

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Seething Landlord

11:25 AM, 5th February 2021, About 4 years ago

Reply to the comment left by Chris @ Possession Friend at 05/02/2021 - 11:14
I suggest you read the press release more carefully.

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Dr Rosalind Beck

11:34 AM, 5th February 2021, About 4 years ago

Reply to the comment left by Chris @ Possession Friend at 05/02/2021 - 11:14
Yes, this is my understanding - that is, that holiday let owners should be hit with s24. As we know, many desperate landlords may have moved into holiday lets to get away from the ruinous taxes faced under s24. To hit them when they are down is plain wrong. To impose a tax on a businesses main cost - as though it is profit - will always be a disgraceful policy.

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Dennis Forrest

12:06 PM, 5th February 2021, About 4 years ago

Reply to the comment left by Dr Rosalind Beck at 05/02/2021 - 11:34
The main problem as has been mentioned many times before is that investing in a BTL property is regarded by HMRC just as that, an investment and not a business. That is why they 'got away with' introducing S24 as a BTL is not regarded as a business (unless it is part of a company set up)
A holiday let, providing it complies with the 210 and 105 day rules, and a few other rules, is counted as a business. The profits from it count as earnings and not investment income. Extra tax deductible pension contributions can be made and CGT treatment is also more favourable.
There are lots of people who enter BTL by accident. Properties left in wills and the relatives can't sell easily so they decide to rent at least in the short term. There are very few, if any accidental owners of holiday let businesses. I believe that when the Housing Act, 1988 I think, came in then HMRC rightly or wrongly thought it would be easier all round to treat these rental incomes as investment income.

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Mark Alexander - Founder of Property118

12:09 PM, 5th February 2021, About 4 years ago

Reply to the comment left by at 05/02/2021 - 12:06
HMRC are changing their tune though. Look up HMRC manual PIM1020 which was updated in December 2020

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Seething Landlord

12:25 PM, 5th February 2021, About 4 years ago

Reply to the comment left by at 05/02/2021 - 12:06I agree with your analysis except to say that s24 originated with George Osborne and his advisers rather than with HMRC. I remain convinced that he believed that the housing market had been distorted by the prevalence of highly leveraged btl landlords and was determined to address what he saw as an anomalous situation.
You rightly point out that there is a world of difference between running a holiday let business and
managing a portfolio of a few privately rented properties.

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john glynn

12:37 PM, 5th February 2021, About 4 years ago

Reply to the comment left by at 05/02/2021 - 12:06You are so correct and I agree with everything you said. I own BTLs and FHLs and the FHLs are such hard work and extremely time consuming. What I don't understand though is if two landlords have an equal portfolio of BTLs and one is a limited company and the other a sole trader. How did Osborne gat away with classing one as a business and the other an investment??? To my mind it has to be the scam of the century.

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Seething Landlord

12:39 PM, 5th February 2021, About 4 years ago

Reply to the comment left by john glynn at 05/02/2021 - 12:37
I don't know the answer but suspect that they take the fact of incorporation as evidence that the portfolio is being run as a true business.

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