The Chancellor of the Exchequer has been urged to use today’s Budget to support economic growth by boosting the supply of new homes.
In what will be the first full-blown Conservative Budget for some 18 years, George Osborne is expected to present a package of measures that will have significant impact on the housing sector, but the Residential Landlords Association (RLA) has urged the Chancellor to build more homes to rent in an effort to boost jobs and support the economy.
With the “vast majority” of landlords being individuals renting out just a few properties, the RLA is calling for the Government to use the tax system to recognise this as a business activity which it currently does not.
Among its proposals made to the Treasury, the RLA is calling for an end to the “anomaly” that means that VAT can be reclaimed where a new home is built for owner occupation but not if it’s built for rent.
To support the Government’s ambitions for home-ownership, the organisation is also calling for roll-over relief on Capital Gains Tax where the sale of a rented property is to a first-time buyer, with suitable controls to prevent abuse, such as an upper limit on price.
“The private rented sector is now the only housing tenure growing, with demand set to increase further,” said the RLA’s chairman, Alan Ward. “As the Financial Secretary to the Treasury has alluded to, encouraging growth in the sector is good for jobs and good for all those looking for a home. The Chancellor has a golden opportunity to go for growth which we urge him to seize.”
Property and planning consultancy, Andrew Granger & Co has also called on the Chancellor to use tomorrow’s Budget to make housing a priority.
“We hope the government will continue to support housing, and that measures to address housing shortages be reflected in the budget. We need more new housing of all kinds to meet demand,” said the company’s founder and director, Andrew Granger.
“Relatively high rents mean people are getting a return on property that is much better than they can achieve with other kinds of investments,” said Mr Granger. “Because of a shortage of suitable properties, the effect has been to push up property prices, rather than reducing rents, so people who currently rent their homes not only see their rents remaining high but also see the prospect of buying their first home becoming ever more distant. It would be good to see measures in the Budget to address these issues.”
“While we don’t expect to see anything specific in the budget about rural housing shortages, we do think the government has to address this issue somehow soon,” said Mr Granger. “We doubt that the Neighbourhood Plans initiative will be effective and may actually end up being counterproductive in some villages and communities if it causes friction between groups of neighbours with different ideas.”