By According to a report in The Sunday Times, the upcoming Budget is expected to include a £300 million tax increase targeting the private rental sector, particularly second home owners who profit from holiday lets.
The leaked information suggests that Chancellor Jeremy Hunt plans to abolish several tax advantages currently enjoyed by landlords who rent out their properties for short-term holiday stays rather than to long-term tenants.
The rationale behind this tax increase is twofold. Firstly, it is seen as a means to offset the cost of proposed income tax cuts. Secondly, the Chancellor argues that by curbing the tax benefits associated with holiday lets, the government can address housing shortages in coastal areas and popular holiday destinations like Cornwall and the Lake District. It’s suggested that some landlords are favouring holiday lets due to the attractive tax incentives, thereby reducing the availability of housing for local residents.
If implemented, this tax raid would mark another move by the Conservative government to increase revenue from property-related activities. However, it also reflects an attempt to balance fiscal measures with housing policy objectives, aiming to address housing shortages in areas heavily reliant on holiday accommodation.
Landlord Today are reporting that the proposal closely mirrors a policy suggestion put forward by activists in the Generation Rent group, highlighting their influence on government policy discussions. Generation Rent’s chief executive, Ben Twomey, had previously advocated for withdrawing mortgage interest relief from holiday lets to prioritize long-term rentals for tenants.
The property industry, representing landlords and letting agents, has expressed strong opposition to the proposed tax changes. Nathan Emerson, chief executive of the main agents’ trade body, voiced concerns about the potential impact on landlords already facing challenges from inflation and interest rate increases.
The National Residential Landlords Association (NRLA) criticized the proposed tax grab, arguing that it would not address the chronic shortage of long-term rentals. NRLA’s chief executive, Ben Beadle, emphasized the need to attract new landlords to the market and called for measures such as scrapping the stamp duty levy on additional home purchases to stimulate supply.
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