Tax cuts for landlords ‘will fix rental crisis’

TAX cuts for landlords are the only way to solve London’s rental crisis, the boss of estate agent Foxtons has said.

Guy Gittins said Jeremy Hunt should use his Budget to cut stamp duty on second homes or taxes on rental profits amid a surge in landlords selling up.

Successive tax rises have created a “big barrier” that is blocking landlords from entering the market and means the supply of homes to let is slowly reducing over time, he warned.

More landlords in the capital are selling than buying. In 2023, landlords were behind 15pc of homes sold in the capital, but only 9pc of those bought, according to Hamptons estate agents.

Mr Gittins said: “Unless they [the Government] can click their fingers and create 500,000 lettings units that have been sold to build to rent operators, that is the only way that we’re going to solve the problem in the short term.”

Since April 2016, landlords have had to pay a three percentage point stamp duty surcharge on all purchases.

Reductions in tax relief on buy-to-let mortgages also mean landlords who own properties in their own names must pay tax based on their revenues rather than profits. Since mortgage rates soared, many have to pay tax even if they make a loss. These policies com- bined are a major deterrent for new landlord buyers, which means supply cannot keep up with demand and prices have soared, Mr Gittins said.

Foxtons’ revenue from lettings rose by 16pc year-on-year in 2023, partly offsetting a 14pc drop in revenue from sales, because of the housing market downturn. Its overall profits before tax were down by 34pc to £7.9m.

Separately, building materials supplier Travis Perkins, which owns Toolstation, has also been hit by the housing downturn. Profits before tax plunged by 71pc in 2023 after housebuilders cut back on new projects last year.