Tax breaks for let properties is the answer to housing problems - Yorkshire Post Letters

Each for their own electoral reasons, Labour has its love affair with social (that is to say subsidised) housing and the Conservatives with owner-occupied housing. Neither has been a friend to the private landlord or the private tenant.

In the case of the Conservatives, this is unfortunate given the significant place that both the tenant and landlord roles could have in the natural life-cycle of owner-occupiers.

Under the owner-occupation monomania we buy a property at the earliest possible moment, stretching ourselves to the most expensive we can possibly afford and so taking on the highest possible ratio of borrowing to equity.

We continue in the same vein as we make our way up (with apologies to readers who like myself are moved to vomit by this phrase) the housing ladder.

The ‘owner’ does own a potentially large profit or loss, but to call them a ‘property owner’ when the value of their property roughly equals their debt seems a mockery.

In their first years they are an accident waiting to happen. This only ends if the price inflation they were anticipating is sustained. Meanwhile, if they are higher earners or in a relatively inexpensive property area, they will have been taking up more housing space than they actually needed, and more so later after their children leave home.

This upward progression would be marred if each house move were to be met with a capital gains tax bill. So, owner occupied residential property is exempt from this tax. There is no such exemption for let properties, which bear a tax ultimately to be paid by tenants.

Suppose, instead, that there were a level tax playing field between owner-occupied and let property. Rather than take a house-sized leap into ownership, beginners could accumulate property shares at a rate they can afford knowing their investment will appreciate at the same rate as the housing market and enjoy the same tax advantages as if they lived in the property. They would be allowed to offset rent they pay against the income they receive from rent.

Owners would be able to separate the question of where to live and work or retire from that of where to hold their residential property and in what form: one large property or multiple smaller ones, some or all of which they let. The effect on mobility of labour could be transformational.

Were we not at the wrong end of three years of opposition-endorsed government recklessness one might suggest abolishing capital gains tax on let property to bring it into line with owner-occupied. As it is, the equivalent for our time might be to set a total value, above that of the great majority of individual owner-occupied houses now, within which properties can be declared as capital gains tax exempt regardless of how many of them there are or who lives in them.