Propertymark Calls for Landlord Tax Changes

Property sector body Propertymark has made a set of suggestions on how it believes the tax system should be changed, to avoid driving private landlords out of the sector.

It says that the private rented sector (PRS) plays a crucial role in providing housing across the UK. However, recent tax and financial changes have had a detrimental impact on landlords, leading to a decrease in available rental properties. In order to encourage investment and reduce rents, it is necessary for the UK Government to review the impact of these changes. This article will explore the current tax and financial situation for landlords and present recommendations to incentivise and increase the number of properties available for rent.

The increasing tax burden on landlords

Over the past few years, landlords who offer homes to long-term tenants have faced higher rates of tax on property purchases. For instance, in England and Northern Ireland, a buy-to-let landlord purchasing an additional property for the average UK house price of £290,000 can expect to pay £10,700 in stamp duty, compared to the £2,000 paid by a main resident. Similarly, in Scotland and Wales, landlords face significantly higher taxes on additional properties compared to main residents.

Furthermore, changes to the Capital Gains Tax (CGT) have also impacted landlords. While top-rate taxpayers saw a reduction in CGT rates from 28% to 20% in 2016, landlords were excluded from these cuts. This means that landlords face higher CGT rates when selling a second property, compared to individuals selling shares in a company that owns a property.

Other burdens include a reduction in tax relief on mortgage interest costs and the removal of the 10% wear and tear allowance for fully furnished properties. These cumulative changes have limited opportunities for small investors, as the ability to offset finance costs against tax liabilities has been eroded. Additionally, there is little incentive for landlords to upgrade existing rental properties, as repairs and maintenance are tax deductible but improvements are not.

Propertymark’s recommendations

To address the impact of the current tax regime on the availability of rental homes and the costs passed on to tenants, Propertymark has outlined several recommendations for the government:

  1. Review taxes that apply to private landlords: The government should develop policies that promote long-term investment and reduce costs for tenants.
  2. Reinstate mortgage tax relief: The playing field should be leveled between landlords operating in their own name (who are subject to the tax changes) and those who are set up as a business (who are not).
  3. Reduce taxes on additional properties: The current surcharges on additional properties must be reduced. A fair approach would be to split the surcharges, with a lower percentage paid by landlords investing in the PRS and a higher percentage paid by individuals purchasing second homes.
  4. Bring back tax relief for energy efficiency: The government should assist landlords with the cost of energy efficiency work and ensure that tenants benefit from lower bills.
  5. Reduce CGT thresholds: Residential property should be aligned with other asset classes, removing the current disincentive to invest.
  6. Avoid rent control: Evidence suggests that flexible tenancies and rent prices driven by market forces have contributed to the success of the private rented sector in the UK. Therefore, rent controls should be avoided.


Propertymark says that the current tax and financial changes have negatively impacted landlords in the private rented sector, leading to a decrease in available rental properties. To encourage investment and reduce rents, it is crucial for the UK Government to review the impact of these changes. They have provided a comprehensive set of recommendations to incentivise landlords and increase the number of rental properties.