ARLA calls for tax breaks for private landlords

The government should support growth in the private rented sector and remove barriers to further investment, says the Association of Residential Letting Agents (ARLA).

In a Budget submission to chancellor George Osborne, ARLA calls for landlords to be treated as entrepreneurial businesses for capital gains tax purposes, so that they can enjoy the same tax reliefs as other firms.

At the moment some landlords face bills of 28 per cent when they sell a property, which ARLA says prevents them reinvesting in the market.

It wants the government to allow landlords to take advantage of the roll-over relief available to other businesses and only charge capital gains tax on gains released from the business as a profit.

ARLA also wants the reform of stamp duty to remove the slab structure that it says unfairly distorts the market.

Ian Potter, operations manager at ARLA, said: “Demand for private rented housing continues to grow with 3.4 million tenants living in the private rented sector, an increase of over one million tenants since 2005.

“The tax system can be used by the government to incentivise investment in housing stock in the private rented sector and therefore improve the conditions in which those 3.4 million tenants live.”


Research suggests rental demand is softening

An easing in the demand for rental property and a rise in the numbers of tenants struggling to meet their monthly rent payments signals that the rental market may be softening, new research suggests.

According to ARLA’s latest research, in Q4 2011 just over half (55%) of ARLA members reported more tenants than properties available. While this indicates that demand is still robust, the figure is sharply down on Q3, when three-quarters (74%) of members noted that trend.

The number of consumers actually signing a new tenancy was consistent with Q3, with an average 34 new tenancies signed per ARLA member office during each quarter. The figure was lowest in Central London, where an average 26 tenancies were signed per branch during October – December, compared with an average 31 in Q3.

Over the same period, 39.2% of members reported an increase in tenants struggling to pay their rent; up from 36.7% the previous quarter.

Tim Hyatt, president of ARLA, said: “The apparent drop in demand for rental properties could be due to the traditionally quite pre-Christmas period. At the same time, it could indicate a reversal of the surge of new tenants who turned to the PRS when they could not afford to buy.

“With household income decreasing and job uncertainty prevailing, it could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance – some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted.

“We are reassured by the fact that the number of new tenancies is stable, but we will be watching the market closely in the coming months to determine how significant these latest figures will prove to be.

“In tough economic conditions both landlords and tenants can find themselves struggling to keep up with rent or mortgage payments. It is therefore more critical than ever to take references and conduct thorough research before signing a tenancy agreement. Seeking advice from a professional, licensed letting agent is the best way to ensure tenants and landlords’ rights are protected.”