Could government motivate landlords to offer longer tenancies with tax relief?
Landlords could benefit from new incentives, including clawing back tax relief, if they offer longer agreements to their tenants, a property expert has suggested.
In his Conservative party conference speech, Secretary of State for Communities and Local Government, Sajid Javid said: “All landlords should be offering tenancies of at least 12 months to those who want them.
“That is why, at the Autumn Budget, we will bring forward new incentives for landlords who are doing the right thing.”
David Cox, chief executive of ARLA Propertymark, has suggested that one such incentive could be tax relief for landlords who comply, as well as the introduction of a new housing court to speed up the time it takes for a landlord to evict a tenant - one of the main concerns landlords have about offering longer-term deals.
“Tax incentives and easier access to justice are the two key things which will give landlords the confidence to offer longer-term tenancies,” he said.
“Therefore, a specialist housing court with judges who are housing law experts will both speed up the process and provide much greater consistency in judgements.
“Combining the housing court with tax incentives such as repealing the punitive restrictions on mortgage interest relief should provide landlords with both confidence in the legal system and financial incentives to offer longer-term tenancies.”
Tax relief on mortgage interest will taper down and be replaced with a 20 per cent tax credit by 2020, hitting some landlords hard.
This, along with other recent moves allegedly aimed at helping first-time buyers - such as a three per cent stamp duty on second homes - mean that many landlords are concerned about the future of the buy-to-let market.
Mr Cox also suggested reinstating LESA - the landlords energy savings allowance - which was up to £1,500 per property per year to offset against income tax for energy efficient improvements.
And he has called for landlords to be allowed to roll over capital gains tax if reinvesting in another rental property. This is 28 per cent of higher rate taxpayers and 18 per cent for basic rate taxpayers.
Latest figures suggest that landlords haven moved to protect their investments by increasing rents.
The average rent across Britain edged closer to £1,000 a month, rising by 2.1 per cent in September to £927, according to the HomeLet rental index.