Former work and pensions secretary Iain Duncan Smith has called on the Government to stop “punishing” landlords and rethink its stamp duty and mortgage interest relief reforms.
Since April, landlords have not been able to claim tax relief on mortgage interest payments, and by 2020 they will only be able to claim tax credit at the basic rate of 20 per cent, regardless of whether or not they are a higher rate taxpayers.
Buy-to-let investors have also been subject to 3 per cent stamp duty surcharge since April 2016. Both policies were set in train by former chancellor George Osborne.
Writing on the Conservative Home website last week, Duncan Smith said it was a concern that landlords were pulling back from the sector, as housebuilding alone will not satisfy demand.
He said: “It is time for us to reconsider the way we treat private landlords who buy houses to rent. A large number of them are talking about no longer buying to let, and they blame it on Osborne’s decision to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax, and to tax a landlord’s turnover rather than profits.
“This, they believe, has led to private landlords scaling back their operations or even leaving the sector altogether. We should all be concerned about this, because private landlords are a significant provider of the additional housing we need.”
He added landlords should be encouraged through VAT relief on conversions and capital allowances, rather than being “punished.”
He said: “Despite what has been said and written, they’re not enormous property magnates, for the most part, but often people using the market to help provide retirement income in later life or assets to pass on to their children.
“We are now in danger of missing the point, for what is certain is that even if we do achieve our housebuilding target, there will still be a continuing growth in demand and a significant part of this will have to be available through private landlords. It is time to review Osborne’s tax changes on buy-to-let landlords.”