Yahoo Finance Landlords face punishing new costs under property wealth tax plan
Landlords in Wales fear a new wave of wealth taxes will trigger an exodus from the buy-to-let market.
A new cooperation deal signed by the Labour-led Welsh Government and Plaid Cymru includes plans to introduce rent controls and overhaul council tax, which could be replaced by a land wealth tax.
Details are yet to be formally confirmed by the Welsh Government, but Plaid Cymru has previously campaigned for a 200pc council tax surcharge on second homes. Buy-to-let landlords have warned that rising costs will force many to sell up.
Gillian Owens, 65, lives in south Wales and has a portfolio of seven buy-to-lets, six of which are in Wales.
"Rent controls drive perverse activity. They will just drive landlords out of the market," said Mrs Owens. "We have talked about starting to sell up, slowly but surely."
Once the Welsh Government introduces rent controls they plan to sell one property per year, to avoid a large capital gains tax bill.
Ros Beck, 56, another landlord in Wales, said rent controls would be counterproductive because landlords would rush to raise rents before the new rules are enforced.
"I haven’t put my rents up for two years, but when the deal was announced, one of my landlord friends said 'get your rents up quick' to me."
Fresh taxes increases would follow a series of major setbacks for landlords. Since 2017, tax relief on mortgage interest has been phased out. Many investors have suffered rent losses during the pandemic and also face huge bills to make energy efficiency upgrades to meet new, tougher Energy Performance Certificate requirements.
The cooperation deal between Labour and Plaid also included a plan to overhaul council tax. In 2020, the Welsh Government published a technical assessment of using a land value tax to replace council tax. This would mean homeowners face an annual charge based on the value of their land.
Dr Beck said: "As far as I can see, it would be a form of wealth tax."
She added: "I own a two-bedroom house in the Valleys, the rent is £360 per month and I have kept it at that for eight years because the tenant can’t afford any more. If I had to pay a land value tax every month, I would have to raise the rent. I could easily get £500 per month for that property, but then the tenant would have to leave."
There is already a shortage of rental homes in Wales, something Ms Beck fears will be exacerbated by further taxes on landlords.
"I had 200 inquiries for one property, people are offering to pay six months’ rent upfront," she said.
Ben Beadle, of the National Residential Landlords Association, a landlord pressure group, said: "A government may legislate to cap rents, but if landlords’ costs continue to rise they will be forced to withdraw from the market."
Mr Beadle added: "It is frustrating that rather than look for solutions which encourage the increased supply of homes, politicians are looking to scapegoat landlords as the cause of the rising cost of living."
