If new Prime Minister Andy Burnham introduces a property tax many landlords could decide to raise rents or even sell, Savills warns.
Burnham is known to be a supporter of a Land Value Tax, which would involve an annual charge based on a property’s value, to replace Council Tax.
But the impact on property investors and landlords could be severe, especially if prices and values are rising.
Consider selling
Now, estate agents are concerned that a new tax could hit the private rented sector at a time when the effects of the Renters’ Rights Act, which came into force in May, are still being assessed.
Many property sector experts have warned the Act could force landlords to consider selling their investments.
For some landlords, it will add to the weight of the question ‘should I be in the sector?”
Lucian Cook, Head of Residential Research at Savills (pictured), told The Times: “Landlords would certainly be looking to pass on the additional cost to the tenants, which would mean a shortage in supply of rental stock, and a rise in rents.
“For some landlords, it will add to the weight of the question ‘should I be in the sector?’ In turn that would add to the under-supply in the private rental market.”
And Chris Norris, Policy Director at NRLA, says: “The NRLA does not oppose a proper debate about reforming the tax system.
“However, any changes must be handled carefully to avoid unintended consequences, including higher rents and reduced supply in the sector.”