The property industry is voicing significant concerns following revelations that Chancellor Jeremy Hunt is considering a substantial tax levy on the private rented sector in the forthcoming Budget announcement. Reports have surfaced, particularly in The Sunday Times, suggesting that Hunt aims to generate £300 million from the sector, primarily targeting owners of short-term holiday rentals on platforms like Airbnb and Booking.com. This move is intended to offset a proposed 2p reduction in the basic income tax rate.
During a Sunday radio interview, Hunt stated, “[Tax cuts] are my priority for the country. When it comes to this budget, I will only bring down taxes in a way that is responsible, and sustainable.”
The reaction from the industry has been one of alarm. Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), expressed this morning that the focus should instead be on remedying the severe lack of long-term rental properties. He argues that penalizing holiday lets is not the solution, advocating for a reversal of recent tax increases that have hampered the supply of rental homes necessary for renters.
Propertymark has joined the chorus of concern, with CEO Nathan Emerson highlighting the strain already faced by landlords due to inflation and rising interest rates. He emphasizes the need for a practical system that supports the provision of quality homes across all rental durations, criticizing the ongoing targeting of landlords as jeopardizing the sector’s sustainability for both current and prospective investors.
With Hunt scheduled to deliver his second Spring Budget as Chancellor, this move could mark a significant fiscal decision ahead of a potential general election later this year. Despite his commitment to tax reductions, the strategy appears not to extend to second homeowners profiting from short-term lets.
This anticipated tax strategy represents another challenge for the buy-to-let market, which has already been navigating a complex landscape of tax and regulatory changes over fourteen years of Conservative economic policy. The Sunday Times report, believed to be based on leaked information, suggests the Chancellor’s plan will eliminate tax advantages for landlords focusing on holiday rentals over long-term tenancies. This approach, while aimed at addressing housing shortages in popular destinations like Cornwall and the Lake District, is causing widespread apprehension within the property sector about the future viability of rental investments.
