Scottish landlords support move to measure impact of tax changes on affordable housing supply
The Scottish Association of Landlords (SAL) has announced its support for a move to measure the impact of tax changes for Private Rented Sector (PRS) landlords on the availability of affordable housing.
Changes to Mortgage Interest Relief (MIR) will see landlords taxed on their turnover rather than profit, leading to concerns landlords could be driven to bankruptcy and therefore a significant reduction in housing supply.
SAL said the change, which will be debated in the House of Commons today, could push many landlords into a higher income tax bracket despite their income not having increased.
SAL is also concerned it could reduce the willingness of landlords to upgrade properties or invest in new homes. It is possible that the tax due in many cases could be higher than the landlord’s actual income, causing their businesses to go bankrupt, significantly reducing the number of homes available for rent and forcing an increase in rent levels. This, SAL argues, would disproportionately affect the supply of affordable housing in the PRS.
The organisation has backed an amendment to the Finance Billsubmitted by the SNP Shadow Treasury Team at Westminster which would require the UK government to review the impact of changes to MIR on the availability of affordable housing.
The new clause will be debated at Westminster during the Report Stage of the Finance Bill this afternoon.
John Blackwood, chief executive of the Scottish Association of Landlords, said: “The changes to MIR are yet another attack on responsible landlords who provide essential housing across the UK. The changes will mean landlords are taxed on their turnover, unlike every other business in the country which is taxed on profit. This will likely force a large number of landlords to sell, reducing much needed housing supply.
“The result will be increased costs for landlords and either a reduction in investment, an increase in rents or both. All of this at a time when governments in both London and Edinburgh acknowledge the vital role the PRS has in tackling the current housing crisis. We will work with our members to try and ensure vulnerable people do not suffer. Increased costs will inevitably impact most on those who cannot afford to see bills increase, potentially driving them in to the arms of rogue or criminal landlords who do not meet legal standards on safety or tenant security.
“We welcome the amendment by Roger Mullin MP and urge the UK government to accept it. Delaying the implementation of the MIR change until the study is complete will ensure that there is firm evidence available as to the likely impact it will have on the most vulnerable in our society.”