Buy-to-letFeb 9 2023

MPs call for review of BTL tax changes

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MPs call for review of BTL tax changes
Simon Dawson/Bloomberg
ByJane Matthews

MPs have called for a review of recent tax changes on the buy-to-let market and said changes need to be made to make buy-to-let more financially attractive to smaller landlords.

In its report, published today (February 9) the Levelling Up, Housing and Communities select committee provided a number of recommendations in response to the government’s proposals on reforming the private rented sector. 

The committee noted that the high cost of renting, caused by the housing crisis, is the most serious challenge facing renters currently. 

As a result of this, it said it shared some of the concerns landlords have previously raised about the impact the proposed Renters' Reform Bill will have on the size of the rental market.

Landlords have argued that some of the measures in the bill, and greater regulation of the sector, will lead to small landlords being driven out of the market.

The committee therefore recommended that the government take steps to address these concerns and ensure it remains an attractive sector for smaller landlords.

Student accommodation

Elsewhere in its report, the committee welcomed the proposal to abolish no fault evictions and fixed-term tenancies. It said both of these measures would “undoubtedly give tenants greater security of tenure”.

However it recommended that fixed-term contracts be retained in the student private rented sector. 

Currently it is proposed that this part of the sector will be included in the tenancy reforms but the committee concluded that abolishing fixed-term contracts for students would make renting to them much less attractive to private landlords as the student market mirrors the academic year and benefits greatly from 12-month fixed tenancies.

The committee also supported the government's proposal to amend existing legislation so that landlords who wish to sell their property or move themselves or close family members into it still can in the absence of no-fault evictions.

Under the government's current proposal this would be not possible within the first six months of the tenancy, but the committee has said this could be too easily exploited by bad landlords and become a backdoor to “no fault” evictions. 

It therefore recommended that the government increase the period where a landlord cannot avail of this grounds for eviction from six months to one year from the start of tenancy.

Decent homes standard

The committee also welcomed the government’s proposal of a legally binding decent homes standard which would help local authorities enforce housing standards in the private rented sector. 

It did however recommend that the government should come up with financing solutions to help landlords improve energy efficiency standards in homes with EPC ratings below D as these properties are most likely to suffer from damp and mould.