In a bold move echoing suggestions from Generation Rent activists, the government is reportedly considering a £300 million tax initiative aimed at second-home owners profiting from holiday lets. The proposed tax reforms align closely with Generation Rent Chief Executive Ben Twomey’s recent appeal in the I newspaper, advocating the withdrawal of mortgage interest relief from holiday lets. Twomey argued that such a measure would encourage landlords to prioritize long-term housing over holiday rentals, thereby fostering stability for renters.
The leaked information, initially reported by The Sunday Times and later covered by Landlord Today, suggests Chancellor Jeremy Hunt’s intention to abolish tax perks benefiting landlords engaged in short-term holiday lets. The move is framed as a means to address housing shortages in coastal regions and popular holiday destinations like Cornwall and the Lake District.
Despite the government’s assertion that this tax initiative is aimed at tackling housing shortages, critics from the property industry, representing landlords and letting agents, have voiced strong opposition. Nathan Emerson, CEO of the primary agents’ trade body, Propertymark, expressed deep concern over the rumoured tax assault on landlords, particularly during a period when many have exited the sector or are barely holding on.
Emerson argues that landlords, like traditional homeowners, face the impacts of inflation and interest rates, necessitating recognition from the UK government for a workable housing system. He deems it unacceptable that landlords are consistently targeted, jeopardizing the viability of the entire system for both existing landlords and potential investors.
The National Residential Landlords Association also vehemently opposes the proposed tax, emphasizing the need to attract new landlords to address the chronic shortage of long-term rentals. CEO Ben Beadle contends that squeezing holiday lets is not the solution, urging the Chancellor to consider the Institute for Fiscal Studies’ advice. The association recommends reversing punitive tax hikes that have hindered the supply of much-needed homes for renters.
Beadle suggests that scrapping the stamp duty levy on additional home purchases could yield positive results. According to the National Residential Landlords Association, this move could result in almost 900,000 new long-term rental homes over the next decade, providing a £10 billion boost to Treasury revenue through increased income and corporation tax receipts.