A panel of buy-to-let lender experts speaking at FSE Manchester yesterday have suggested that both advisers and landlords should not rule out further changes to tax laws in the PRS due to ongoing political uncertainty and a future change of Government.
The panel answered questions at the financial services industry event at The Emirates - Old Trafford and when asked whether the Government might wish to cut back on mortgage interest tax relief for landlords holding properties in limited company vehicles in order to mirror the changes that have taken place for individuals, they suggested it was unlikely but refused to rule it out completely.
Adrian Moloney of OneSavings Bank, said: “I think it would be a very bold move because you’d have to start changing tax legislation potentially across other areas. I think HMRC are probably quite happy with the level of tax that’s now coming in from buy-to-let landlords so I don’t see changes in that, however the unknown you have is around what another Government might think.”
David Whittaker of Keystone Private Finance, agreed. “The whole corporation tax regime is already tottering – if the Government was to interfere with corporation tax structures they could actually create greater waves and greater damage in other areas. But that’s not to say that a highly-motivated, political Government of a different colour wouldn’t do it because they didn’t care.”
Whittaker did however suggest that HMRC was unlikely to be pushing such a move because it was “generally happy” and that it had “much more visibility with landlords today” and they “were paying a great deal more than they used to”.
The panel were also asked about the recent Government announcement banning S21 ‘no fault’ evictions and whether this might impact on lender’s appetite to lend in the buy-to-let space.
Whittaker said: “The Government have now gone public and said if we are going to repeal and re-write Section 21, we’ve got to make sure we improve the processes around Section 8. There is a recognition that they can’t get rid of the existing rules on the one hand, without having something in its place. The Government appears to know that if they have a continuing lack of political appetite to run a social housing policy, let alone fund it, they can’t afford to mess up the PRS too much.”
He added: “Lenders are not out of this [debate] because it will ultimately impact on our customers if they’re not able to get possession of their properties.”
Moloney felt that until there was more certainty, lender activity and appetite would not be impacted. He said: “There will have to be some amendments to the Section 8 piece before they could do anything with Section 21. I don’t think it will curtail lender appetite at the moment because I don’t think it’s certain enough to make a big thing about it.”
Finally, Steve Cox of Fleet Mortgages said that the wider reliance on the PRS meant that the Government might have to reconsider.
He argued: “I think the most important part is that the Government, whether reluctantly or not, needs a buoyant and thriving PRS because a social housing policy – or lack thereof – is not going to take care of the issue.”