Landlord tax myths debunked by top economist
Leading economist Paul Johnson has debunked the myth landlords are taxed more favourably than owner-occupiers in an exclusive interview with NRLA podcast Listen Up Landlords.
The former director of the Institute for Fiscal Studies, now provost of Queen's College Oxford, has warned any moves to increase costs for landlords will mean higher rents and fewer properties available to let – a point the NRLA has been hammering home to Government for some time.
He told presenters: "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”.
Concluding: “If you make it more expensive to be a landlord, then there will be some combination of fewer landlords and higher rent”, he said it is essential the Government develops a long-term strategy for the private rented sector, rather than relying on short-term tax-grabs.
Kite-flying
With various rumours circulating in the media on everything from Capital Gains Tax and Stamp Duty to National Insurance Contributions, Mr Johnson also criticised what he describes as Government ‘kite-flying’, calling for a comprehensive review of the taxation of housing and property.
This includes a radical rethink on stamp duty which, he believes should be axed, telling the podcast: “It's probably the worst tax that we have, and if I were chancellor for the day, I would abolish it.”
He goes on to outline changes he believes could make a difference to landlords – and gives his expert opinion on the news stories that have been doing the rounds in recent weeks.
Sage advice
Ben Beadle, NRLA chief executive and co-presenter of Listen Up Landlords, has welcomed his comments, which reiterate many of the points the association has made in submissions to Government.
He 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.”
Listen Up Landlords is the NRLA's flagship monthly podcast, featuring a range of expert guests speaking on a host of issues impacting landlords and PRS, from finance and legislative change to practical help and advice when it comes to running your portfolio.
To listen to Paul Johnson’s interview in full click the link below:
