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Can tax incentives encourage private landlords to raise their game? Matthew Warburton - 05/09/2014

To Let 300A new report jointly produced by the Resolution Foundation and Chartered Institute of Housing, calls for the introduction of tax incentives to improve the standard of housing and management in the private rented sector.


It points to the variable quality of performance among private landlords and calls for national agreement on basic standards covering both property condition and management performance, to underpin arrangements for accreditation.


Given common standards, accreditation schemes could be run by a variety of appropriate bodies. Making access to a percentage of the tax relief currently enjoyed by private landlords conditional on accreditation would create the incentive for landlords to seek it.


Suggestions include:


  • Giving accredited landlords a more generous tax allowance for "allowable expenses" (where landlords deduct the cost of repairs from their profits for income tax purposes), compared to unaccredited landlords.


  • Allowing landlords to treat any improvement that is necessary to bring a property up to accreditation standard as an allowable expense (instead of deducting it from the landlord's capital gain liability when they sell the property) - providing an earlier benefit to the landlord from this kind of investment.


  • Allowing accredited landlords to benefit from capital gains tax rollover relief so that where a rented property is sold and the proceeds immediately invested in another the landlord can defer payment of capital gains tax on any profit they have made.


The report also looks at the possibility of unconditional reliefs in relation to the Green Deal and other works to raise SAP ratings, and to boost local authority funding for basic tenancy support schemes.


With the Party Conference season upon us in the last year before what CIH Chief Executive Grainia Long has called the most important General Election for housing in a generation, new suggestions on how to improve conditions for private tenants are particularly timely. They deserve serious consideration.

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