In Focus (2023 Qtr 3): Tax and taxation

Introduction

This Quarter 3 In Focus report gathers views from over 800 private landlords with properties in England and Wales. The Quarter 3 consultations typically focusses on issues around the economy and tax. This consultation looks at:

• Landlord confidence in England and Wales
• Capital Gains Tax and support for possible reform.
• Support for the Property Portal 
• Minimum Energy Efficiency Standards
   

Landlord confidence

Since 2021 confidence has fallen, until it reached record lows in Quarter 2 2023. Quarter 3 however saw confidence rise from 31.3 to 39.2 – one of the largest quarter-by-quarter increases since the inception of the index.  

• Confidence rose in every region, including Wales.
• Despite this more optimistic tone than the previous quarter, confidence remains below the key 50-benchmark.
• The proportion of landlords planning to buy and sell property remain at or around record lows and record highs respectively.

Tax issues

Landlords were asked the current tax landscape. What ownership models do most landlords use? Would a reform of Capital Gain Tax (CGT) incentivise landlords to sell property? 

• Most landlords organise their tax affairs through self-assessments with a much smaller proportion choosing to place some of their portfolio in a LTD company structure. 
• The proportion of landlords using a LTD company structure has levelled off, remaining the same as 2022. 
• Of those landlords who have considered selling property, 45% of landlords said that CGT has been a factor in deciding to hold onto property longer than anticipated when first becoming a landlord. 
   

Property Portal

As part of the Renters’ Reform Bill, there are plans to introduce a Property Portal. The consultation sought landlord views on the Portal as an online store of compliance documents and a 'central hub' for guidance. 

• Landlords are supportive of the portal as a 'central hub' for guidance and compliance. 
• However, they are more sceptical that the portal would be an improvement on the current practice of serving compliance documents direct to tenants.
• Landlord comments inidcate concerns over privacy and the use of the data collected. 

Minimum Energy Efficiency Standards

Amidst the Government’s decision to push back the proposed dates for properties reaching an EPC C rating, what would happen were this policy idea to return? 

Are landlords confident in identifying the route to achieve EPC C? How important are financial aids such as the Landlord Energy Saving Allowance in helping landlords transition to any upward revisions to EPC ratings? 

• Over half of all landlords polled who had property at EPC D or below will either reduce holdings or exit the market all together 
• Over half of landlords are not confident in identfying the route to attain EPC C.
• A big proportion - 85% - consider financial incentives to be "vital" in driving up EPC minimum standards.