Speculated tax hikes on the private rented sector (PRS) have been called “economically damaging” by Paul Johnson, former head of the Institute for Fiscal Studies (IFS).
Johnson, now provost at The Queen’s College, spoke on the National Residential Landlords Association’s (NRLA’s) podcast, Listen up Landlords, ahead of the November Budget.
Johnson said: “I think you need to think very carefully about how to tax housing and how to tax rental housing, and the first myth to bust is the idea… that somehow landlords are under-taxed relative to owner-occupiers, which is complete nonsense.
“If you make it more expensive to be a landlord, then there will be some combination of fewer landlords and higher rent.”
He said the Government should set out a long-term plan for taxing housing and property and stick to it to avoid “uncertainty and the sense that each year there’s a little bit of a budget deficit we need to look to the private rented sector for grabbing money.”
Johnson also called for Stamp Duty to be scrapped, describing it as “the worst tax we have.”
Additionally, he said there was a “strong case” for aligning capital gains tax with income tax rates, but warned against applying it just to inflation.
He suggested a tax-free allowance based on inflation plus 2% or 3%, with capital gains tax paid on anything above this.
Ben Beadle, CEO of the NRLA, said: “Ahead of the Budget the Government must heed Paul Johnson’s sage advice.
“Too often the way rental property is taxed is based on nothing more than topping up the coffers from one year to the next.
“Such knee jerk and short-term thinking is no way to run an economy.
“What is needed is a consistent tax strategy that gives responsible landlords the confidence to invest in the decent long-term homes for rent that so many people desperately need.”
