The Welsh Minister with responsibility for housing, Julie James, has supported the need to review the way the private rented sector is taxed.
Speaking at an event to launch the National Residential Landlords Association’s State of the Welsh Private Rented Sector report, the Minister said she would welcome ideas about how to ensure the tax system supports the provision of long-term homes to rent.
Research in the report shows that 76 per cent of Welsh landlords said demand for rental properties had increased in the first quarter of 2023. Despite such strong demand, 48 per cent said they planned to cut the number of properties they let, leaving renters struggling to find a place to live.
Amidst this supply crisis, the NRLA has called on the Welsh Government to exempt the purchase of additional homes for long term rent from the four per cent Land Transaction Tax levy on additional homes.
Speaking at the event the Minister said she was “very interested” in looking at how to ensure a level playing field for the private rented sector in respect of the Land Transaction Tax.
The Minister has further accepted the NRLA’s calls for better data about the state of the private rented sector in Wales.
In its report the NRLA warns that “the availability of comprehensive, up-to-date, and official data on who lives in the sector, its exact size, and the type of properties in it remains limited.”
The Minister agreed that the Government needed to improve the data to make decisions affecting the rental market. She went on to support the NRLA’s call for a Welsh Housing Survey, subject to completion of a business case by the Government.
NRLA chief executive Ben Beadle says: “Wales needs a strong and vibrant rented sector. We welcome the Minister’s openness to look at how the tax system can support the provision of homes tenants need.
“It is welcome too that the Minister has agreed in principle with the NRLA’s call for a Welsh Housing Survey. Too often good decisions have been hampered by a lack of robust data on the state of the rental market. We will continue to work with the Government to ensure policy is rooted in evidence and what works for responsible landlords and tenants.”
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I don't operate in Wales so I don't know the exact tax regime there but assuming it's fairly similar to England I would suggest a multiple strand approach to encourage existing landlords to stay and new ones into the industry.
Treat anyone with 2 or more rentals in the same way as any other self employed person. One extra property may be accidental, two or more is a commercial decision. Calculate taxable profit in the same way as for every other self employed person with finance costs being a fully tax deductable expense. Class it as earned income so it can be paid into a SIPP. The downside would be that younger landlords may have to pay a bit of NI but is that a bad thing from a pension point of view?
The additional Land Transaction Tax could be paid at the time of purchase and then refunded after 3 years of tax returns have been submitted clearly proving the property is being used as a BTL. Not perfect but probably a workable compromise if they want to retain a higher rate to penalise people who buy second homes for personal use only.
To retain existing landlords for the long haul and get new ones in there needs to be a clear exit route. Other countries achieve this with CGT reducing to zero after a certain number of years of ownership. I would initially suggest zero CGT after 30 years of ownership reducing to 20 or 25 years within a ten year period. The current method of taxing inflation is basic theft and often condemns us to sticking with our portfolios until death do us part. How many young people would sign up to that?
Jo, I am really tired of you coming on here and putting common sense comments. It is really depressing me....
I wish some of these bl@ody politicians would sit down with you for an hour to get tuned in to real life issues.
They are starting to realise what is happening… and they are scared the voters will blame them 😱 as they should 👍🏻 But this is the only reason they are taking note.
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