Interesting claims from Generation Rent
Interesting claims from the Tenant campaign group Generation Rent they are claiming that private landlords are enjoying subsidies worth more than £1,000 per household.
They go on to state that through tax breaks, housing benefit and capital gains tax loopholes a typical landlord is benefiting to the tune of £1000. They relate this by saying this is “enough to buy a top of the range HD TV, a week’s family holiday to Majorca or a Chris Boardman bike”.
Is this not a strange comparison?
Generation Rent also calculated that landlords, who house 4.75m households in the UK, earn £77.7bn per year: £42.3bn in rent and £35.4bn in rising house prices. This is more than Morocco’s GDP of £68.6bn (for a country of 33m people), making the UK’s private rented sector the 61st largest economy in the world.
Generation Rent is calling for an additional landlord levy of 22% on rental income.
It said the proposed “landlord tax” would:
- Raise an additional £9.3bn per year, assuming an industry turnover of £42.3bn.
- Fund the building of approximately 90,000 new council homes, which would ease the demand for private rented housing, lower rents and help reduce the UK’s housing benefit bill.
- Reduce the economic advantage that landlords have over would-be home owners in the property market.
- Reduce the burden of landlord benefits on the wider public.
- Make it relatively harder to make a living by owning property than by working.
Generation Rent said the government is providing equity finance worth £1bn to property developers to build homes for private rent. It also complained that landlords also don’t have to pay business rates.
“Even if they were to pay only £1,000 in business rates for each property – the average retailer pays £12,750 – that would bring the exchequer £4.75bn,” said a statement from the group, “Finally, HM Revenue and Customs estimates that £550m in tax on rental income is evaded by landlords each year.”
Through income tax and capital gains tax, Generation Rent estimates that landlords pay £8.9bn, but even accounting for that it still leaves an overall “subsidy” of £17.8bn.
Generation Rent director Alex Hilton said: “While renters have borne the brunt of austerity, landlords have enjoyed their own little economy the size of Morocco’s supported by subsidies from the UK taxpayer that could be better used fixing the housing crisis.
“Because they can gamble on an asset bubble while claiming all the tax advantages of running a business it’s no wonder landlords are piling their savings into the property market. Meanwhile, people who just want to buy a place to live are at a disadvantage against buy-to-let investors when they bid for property as they simply cannot compete with someone who can write interest off against tax.
“It’s time landlords started paying more of their fair share so first time buyers could have a level playing field and the government could have the resources to build more social housing.”