New tax incentives offered to landlords to improve housing standards
![Calculator photo [via pixabay]](/_resources/files/blog-posts/calculator-tax-incentives.jpg "Call for landlords to be offered new tax incentives [photo via pixabay]")
In an attempt to encourage landlords to improve the condition and management of their properties, the Chartered Institute of Housing (CIH) has proposed a new incentive that recommends adding an element of conditionality to the tax relief currently available to landlords, if they sign up to a national accreditation scheme. The proposal has been hailed by Ajay Jagota, a leading property expert, as a helpful contribution to the debate on how to increase the number of properties in the UK currently reaching the government's Decent Homes standard.
A minimum standard of decency
In 2012, the UK Government published a new policy for improving the rented housing sector, in which they outlined a minimum standard of decency that all properties should adhere to. These standards require all properties to be free of health and safety hazards, reasonably insulated and in a reasonable state of repair. Currently, an estimated 1 in 3 properties fail to meet these expected standards and it has been argued by the CIH that the introduction of new tax incentives would result in better quality housing as it provides landlords with both the resources and the motivation they may need to ensure their properties meet these standards.
Private landlords in the UK collectively receive around £7 billion in tax allowances every year to allow for essential repairs and maintenance, but a report jointly compiled by the CIH and the Resolution Foundation (RF) stressed that there is no incentive for landlords to carry out work beyond the minimum standard expected. In an effort to encourage landlords to raise their property standards, the report outlined new measures and incentives that could be used, including either providing additional funds or diverting more of the existing allowance to those who sign up for a national accreditation scheme.
Measures to improve standards
As more individuals turn to property investment as an additional means of income, the standards of housing management have become inconsistent as there are fewer professional landlords and more so-called accidental landlords with one or two properties to manage. Currently, governmental policy is focused on encouraging greater competition in the rental sector to ensure landlords improve the standards of their properties, whereas the Labour governmental policy focuses on increased regulation. This report highlights the need for a combination of both approaches in order to tackle rogue landlords while improving property standards.
The main recommendations suggested by the CIH and RF include the creation of a single, easy-to-understand set of minimum standards and the use of financial incentives in the form of tax cuts. As part of these incentives, landlords would be allowed to treat any improvement needed to bring their property up to these new condition and management standards as an “allowable expense” – enabling them to receive the benefit immediately, rather than having the money deducted from their capital gains tax liability when they come to sell the property.
An increased selection of affordable housing
Speaking about the report, CIH Chief Executive Grainia Long criticised the current government’s focus on boosting home ownership while more people from a variety of backgrounds are instead living in the private rented sector, including older people and families with children. Considering this, Long calls for more to be done to develop ways of raising standards in the rental sector and make renting a better and more affordable option.
At CPS Homes, we have gained accreditations and memberships from several industry-recognised regulatory bodies, including the Association of Residential Letting Agents (ARLA) and Landlord Accreditation Wales, ensuring that all of our rental properties offer accommodation you can trust, owned by fully accredited and regulated landlords. If you’re looking to rent a property in Cardiff city centre or any of its surrounding areas, contact us today to tell us what you’re looking for and we’ll help you find your ideal property.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
