Tax  

Labour will increase tax on buy-to-let rent if elected

Labour will increase tax on buy-to-let rent if elected
Labour MP Tulip Siddiq, who has said the party will look at taxing buy-to-let properties

The Labour Party will look at raising the tax on rent from buy-to-let properties if elected, an MP has said.

In a speech on Friday (May 20), Tulip Siddiq, shadow economic secretary to the Treasury, said the party was committed to “unlocking capital”.

"Unearned income [such as rent on buy-to-let property] is taxed at a much lower rate than earned income,” she said.

"This requires new thinking in terms of regulation and government tax policy. We want to make sure unearned income is taxed properly and we don’t feel that it is at the moment."

Siddiq also said there was a growing consensus that the tax system in this country is not working. However, while this is something her party are looking at, she said a full policy had not yet been developed.

"Any change we make to our tax system we [will] want to make sure is guided by fairness and anyone who has worked really hard doesn’t pay too much tax," she said.

Clamp down

The Conservative government has enacted a series of tax changes over the past few years that are widely seen to have made buy-to-let investing less attractive. 

These include a 3 per cent stamp duty surcharge, more stringent affordability tests and reforms to mortgage relief.

Pundits have subsequently predicted sell-offs as smaller landlords divest properties from their portfolios.

Some buy-to-let landlords have even turned to cryptocurrencies in a bid to shore up profits.

Following the Spring Statement in 2021, FTAdviser reported on a poll from FJP Investments, which found 68 per cent of landlord respondents believe buy-to-let has become "far less attractive".

Some 44 per cent indicated they were looking to sell one or more properties in 2021. 

Earlier this year, research showed that B2L loan sizes jumped by 13 per cent in January 2022, meaning the average maximum loan available to prospective and existing landlords is now £421,053 - some £20,000 higher than at the end of December 2021.

Buy-to-let investors yielded an average of 5.7 per cent on their property investments in the first quarter of this year, down from 6.3 per cent in the first three months of 2021.

sally.hickey@ft.com