Tax incentives needed for longer term tenancies says the RLA

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Longer Tenancies:

The RLA is urging the Chancellor to back Longer Tenancies in rented homes.

Landlords are urging the Government to back longer tenancies in rented housing to meet the needs of the growing numbers of families with children who rely on the sector for their home.

Almost 40 per cent of private rented homes have at least one child living in them, with such families seeking long term stability to settle into their communities and local schools.

Rather than resorting to legislation to impose longer tenancies on the sector, where tenants have already been living in their rented homes for almost 4 years, the Residential Landlords Association (RLA) is calling for tax reforms to encourage and support more landlords to offer them. The Government has already admitted that such incentives “could be quicker to implement� than legislation. It would also ensure that the vital flexibility the sector is good at providing is retained, enabling those wanting short term tenancies to quickly access new work and educational opportunities.

In its submission to the Treasury ahead of the Budget on 29^th October, the RLA is calling for tax relief on rental income which could increase each year a tenancy continues up to a maximum of 5 years if the tenancy is renewed. The relief would then remain at this level.

Alongside this, the RLA is calling on the Government to develop its plans for a housing court to speed up justice for tenants and landlords if something goes wrong in a tenancy, especially long term tenancies. At a recent event hosted by the RLA, the Housing Secretary, James Brokenshire confirmed that it will be consulting on a housing court in the next few months.

The RLA’s research exchange, PEARL, has found that 73 per cent of landlords would offer longer-term tenancies with a combination of financial incentives and court reform to ensure that they have the confidence that where they provide a longer tenancy they can swiftly regain possession in cases such as tenants failing to pay their rent or committing anti-social behaviour.

 David Smith, Policy Director for the RLA said:

“Landlords recognise the demand for longer tenancies which provide stability for tenants and landlords.

“Recent statements by MPs suggest that positive taxation to support longer tenancies would gain support in Parliament, enabling such tenancies to become available far quicker than imposing them by law.

“We call on the Chancellor to back this pragmatic proposal.�

• The RLA’s Budget submission for 2018 can be accessed here
• The English Housing Survey for 2016/17 can be accessed here
• Page 10 notes that 38% of private rented households have at least one child living in them.
• Page 19 notes that “for private renters the average length of residence was 3.9 years.â€�
• The Government’s consultation, “Overcoming the Barriers to Longer Tenancies in the Private Rented Sectorâ€� can be accessed here. Page 21 notes that financial incentives “could be quicker to implementâ€�than legislation.
• In 2015, the then Financial Secretary to the Treasury (now the Justice Secretary), David Gauke MP, argued that: “The provision of rented accommodation…supports the economy through improved labour market flexibility.â€� Source here
• RLA PEARL’s recent research on tenancy reform can be accessed here It notes that 73% of those landlords responding “reported court reform and tax relief would encourage voluntary longer-term tenancies.â€�
• Meg Hillier MP (Labour, Hackney South and Shoreditch – Chair of the Public Accounts Committee) made her comments during oral questions to Ministers at the Treasury on 29^thNovember 2016. It can be read here  She said: “More people in my constituency rent privately than own their own homes and for most of them ownership is a distant or impossible dream. Are the Government considering looking at the supply of private rented housing on longer tenures, perhaps with rent guarantees, and possibly using tax reliefs or other mechanisms the Treasury has in its armoury, to encourage landlords to provide those longer-term tenancies and better security for the many private rented sector tenants.â€�
• Kevin Hollinrake MP (Conservative, Thirsk and Malton – Member of the Housing, Communities and Local Government Select Committee) made his comments during a debate on temporary housing on 7^thNovember 2017. It can be read here He said: “I agree that we should consider longer tenancies. They should be voluntary for landlords, but there should be incentives. I wonder whether one such incentive could be to allow some dispensation around the section 24 mortgage interest provisions that have been introduced, because they have been received quite badly by many landlords. If landlords are willing to offer longer tenancies, perhaps there should be some dispensation around how we treat mortgage interest in the private rented sector.â€�
• Sir Robert Syms MP (Conservative, Poole – Former Chair of the All Party Group for the Private Rented Sector) made his comments during a debate on Housing and Homes on 15^thMay 2018. It can be read here He said: “If we are going to give security to people, it is right that we should give security to people who can buy. The social housing sector generally gives security to people, and of course we need to build more council homes, but we also need to give more security to those in the private rented sector. Somehow the Government, perhaps through tax incentives or capital gains incentives, ought to try to ensure that leases of three years or five years are available to families.â€�

The Residential Landlords Association: The home for landlords. The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties. A growing community of landlords who trust and rely on us to deliver day-to-day support, expert advice, government campaigning, plus a range of high-quality services relevant to their needs.

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