A director of the Institute of Fiscal Studies since 2011 Paul Johnson is calling for the government to scrap stamp duty for PRS landlords.

Johnson is used by many news organisations to provide his views as an independent analyst of economic policy, writing in The Times and on the Institute’s website, he says: “Not only do prospective landlords have to pay extra stamp duty, they pay far more tax on other aspects of their investment than do owner-occupiers. They pay tax on rental income received, with now only limited tax relief on mortgage payments. A higher-rate taxpayer whose rent receipts only just offset their mortgage interest payments will still pay tax of 20 per cent on their rental income.

“Landlords also pay capital gains tax on the sale of the property, including on purely inflationary gains. Even ignoring stamp duty, the effective tax rate on the real return received by a higher-rate taxpayer buying a property to let, with a 50 per cent mortgage and selling after ten years is something like 76 per cent. That rises to 86 per cent for additional (45 per cent) rate taxpayers and can easily exceed 100 per cent for landlords with bigger mortgages.

“To repeat, it is tenants, actual and potential, who suffer. The more harshly that landlords are taxed, the higher rents will be.”

Johnson also says that one of the prime reasons for causing larger rent increases is down to the constant and increasing tax burdens lumped onto private landlords.

He highlights the necessity to abolish or scrap stamp duty for PRS landlords in the Spring Budget and of course it will not be seen as a popular vote winner by ‘helping’ private landlords, however if looked in a positive perspective then it means this would encourage an increase in private rental housing supply and of course reduce rents.

Paul finishes by saying that even homeowners stamp duty charges is “eye-watering” in some regions of the UK.

Blog Post from PIMS

See details of our CHG Guaranteed Rent Scheme here