Landlords open to tax breaks for long-term tenancies

It has just been announced that the government is considering introducing tax incentives for landlords who offer longer tenancies.

The Ministry of Housing, Communities and Local Government has launched a consultation on implementing a three-year tenancy model which would see the introduction of tax breaks to landlords who are open to long-term lets.

This move is intended to support the increasing number of private tenants seeking long-term security, as more families and older people plan to stay in privately rented accommodation.

The report has put forward a number of options, including introducing a financial incentive for landlords in the form of tax relief or cash payments. The Residential Landlords Association (RLA) has said that this would encourage 63% of landlords to offer a longer tenancy.

David Smith, policy director for the RLA commented:

“With landlords having faced a barrage of tax increases we believe that smart taxation, such as that being proposed, would provide the longer-term homes to rent many families and older people want.”

According to the government report, 41% of privately renting households in England do not expect to move into home ownership. Of these, 38% have dependent children so the increased security would provide some much-welcomed news.

Other proposals for implementing the longer tenancy model included enforcing it through legislation or introducing it as a default option. The RLA has however warned against making three-year tenancies a statutory requirement, arguing that many tenants require the flexibility of shorter-term arrangements.

Further financial incentives for landlords which have been discussed include compensating those who demonstrate compliance with other legislative requirements such as completing annual gas safety checks and protecting deposits taken in a Government-approved tenancy deposit protection scheme.

If you’re a landlord and would like to find out more about our tax planning services, please feel free to contact PKB Accountants and we will be more than happy to help.