Chancellor's budget fails to incentivise buy to let landlords says ARLA

The Association of Residential Letting Agents (ARLA) has labelled the Chancellor’s recent Budget, ‘wholly unsatisfactory’ for having failed to improve rental housing stock for a growing number of tenants.

Ian Potter, operations manager of ARLA said: “Alistair Darling had a clear opportunity to improve the bottom end of the rental market and chose to maintain the status quo for Britain’s worse off tenants.

“Yet again Gordon Brown’s administration has wasted an opportunity to improve the quality of stock of lettings property by failing to incentivise landlords through tax relief on labour and materials.

“Not only would this have helped to stimulate the market, particularly in the construction sector, but it would also have provided the greater standards of rented accommodation that this country desperately needs.”

A recent ARLA survey showed that 61 percent of landlords indicated that if they were to receive tax relief they would upgrade their property portfolio.

Potter added: “Landlords should be recognised for what they bring not only to the housing market but to the wider economy and treated as any other responsible business.”

In its Budget submission, ARLA also called on the Government to introduce capital allowances for landlords improving housing stock over a certain age.

For the housing and mortgage market in general, the relevant measures in the budget included:

• The introduction of a scheme to guarantee mortgage-backed securities
• Maintaining the standard rate of 6.08 percent at which income support for mortgage interest (ISMI) is being paid for a further six months (to December 2009)
• Extending the criteria for mortgage rescue (the scheme being delivered via local authorities) so that negative equity cases are not automatically precluded
• A new £20 million scheme for local authorities to provide loans to families at risk of homelessness
• An extension to the end of the year of the £175,000 starting threshold for stamp duty
• An £80 million extension to the Homebuy Direct scheme
• Extension of ISA allowance from £7,200 to £10,200, providing a modest boost for the outlook for retail savings, and hence funding.

Commenting on the measures, the Council of Mortgage Lenders (CML) director general Michael Coogan said: “The most important element of this Budget for the mortgage market over the long term may prove to be the new asset backed securities guarantee scheme. This potentially offers an opportunity to restart the capital market funding for mortgages that will be a crucial factor in delivering an adequate supply of mortgage credit.

Although the Budget measures will have little short-term impact on the housing and mortgage markets, they do at least remove some of the uncertainties associated with the potential impact of withdrawing stamp duty and ISMI concessions too early, and provide some relief to support the new-build housing market.

“The Chancellor had little room to make substantive interventions, so there are no real surprises in this list. The measures overall are unlikely to significantly improve prospects for higher market activity in the coming months.”