Taxing tenants: How taxes on landlords end up hitting tenants

The housing crisis has prompted the government to take a number of policy decisions aimed at making it easier for people to buy a home. Together with policies implemented by local authorities, much has changed in property markets for owner-occupying buyers, landlords and tenants. These changes are not sufficient to tackle the housing crisis, whose underlying cause is planning policy restrictiveness.

Summary:

  • The 3 per cent stamp duty additional homes surcharge will help prospective buyers but it will hurt tenants in rented accommodation
  • The restriction of finance cost relief for individual landlords will also advantage prospective buyers at the expense of tenants
  • Both policies will distort housing markets, with implications for incomes, employment and overall welfare
  • These tax hikes make Britain’s complex tax system even more complicated and distort ownership structures
  • Other local policy choices such as increasing the cost of houses in multiple occupation (HMO) licences and introducing landlord licencing schemes will hit tenants
  • Existing owner-occupiers taking advantage of lower house prices to expand their consumption will tighten supply conditions in the lettings market, raising rents

Read the full research here

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