Bringing back the Landlords’ Energy Saving Allowance and a capital gains tax cut have been included on a wish list of demands for Philip Hammond, ahead of this year’s Budget. The National Landlords Association has also used the opportunity to once again express its opposition to changes to tax relief on mortgage interest. At the moment, landlords can offset all of their mortgage interest against tax. However, this is being phased out from April, which will restrict the amount of mortgage interest that landlords can offset against tax. By April 2020, higher taxpayers will see their mortgage relief slashed to 50 per cent of what they currently receive. This means they will have to pay more income tax.
The NLA is also putting forward three demands, along with its alternatives to Section 24 regarding tax relief. The association recognises that the government’s priorities lie elsewhere because of Brexit. Its demands are:
To cut or reduce capital gains tax. The NLA believes this will help with poorly performing property and help investors to diversify their portfolio. The NLA has sent costings to the Treasury to show this will not be as expensive as it might think. The NLA found that 35 per cent of private landlords had delayed selling a property because of CGT, while another 29 per cent feared they could not retire because of the CGT they would have to pay. The submission to Mr Hammond says that the CGT taper should be proportionate to the time that a property has been held. The NLA has previously proposed a taper could apply to property held for at least five years, and increase to a CGT liability of 50 per cent for properties held for 10 years or more.
Extending business asset rollover relief. This will also allow investors to restructure their portfolios. This will also help to protect landlords, as it could lead to increased property sales and greater mobility between tenures. It could also help to protect landlords against market shocks, while improving stability.
Bringing back the Landlords’ Energy Saving Allowance. From April next year, new tenancies cannot be given on properties which have an Energy Performance Certificate rating of F or G. This will affect older properties in particular. The NLA is urging the government to reintroduce the LESA, to help ease the major capital costs of some 300,000 landlords who will need to either make improvements to their properties or sell up.