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Housing campaigners want 22% buy to let tax
12 February 2015
Private landlords should pay a 22% stealth tax on their investment property to finance the building of social housing, claims a new think-tank report.
The annual levy would be in addition to any taxes paid and is aimed at clawing back tax breaks and housing benefit paid to private buy to let landlords.
Collecting the money would mean landlords signing up to a national register – and fines and penalties if they fail to join the scheme or pay the levy on time.
The proposal comes from think-tank Generation Rent, a group that campaigns for better private rented housing standards and tenant rights.
Ironically, Generation Rent is funded by The Nationwide Building Society, which is the UK’s second largest landlord mortgage lender through their brand The Mortgage Works.
The Generation Rent web site flags their funding comes from The Nationwide Foundation and that their opinions are not necessarily those of the lender.
The think-tank argues private landlords receive £27 billion a year in tax breaks and housing benefits paid to tenants and generates almost £78 billion a year in rents and capital gains.
With 1.63 million landlords paying the 22% levy, the think-tank reckons more than £9 billion could be raised to direct into building 90,000 social homes every year.
The impact on the rental market, says Generation Rent, would be:
• More affordable social housing which would reduce the need to pay private landlords housing benefit
• Introducing more social housing to the market would reduce private sector demand and gradually bring down rents
The campaigners have launched an online petition to test support for the proposal.
“During this age of austerity, landlords have made a colossal amount of money from capital gains and rents, and enjoyed generous subsidies while their tenants face stagnant wages and cuts to the welfare state,” said a Generation Rent spokesman.
“People who work for a living are funding through their taxes the lifestyles of people who can make a living simply because they own property and someone else doesn’t.
“To redress the balance, the government can use the tax system to redress the balance and make sure landlords pay their fair share. While the value of the missing income and capital gains tax will fluctuate year by year, the annual outlay of £9.3bn in housing benefit shows no sign of going away.”