British Property Federation: Build-to-rent homes must be excluded from the Government’s new residential property developer tax
The Government published yesterday its draft legislation of the Residential Property Developer Tax, in which it confirmed its intention to exclude the purpose-built student accommodation sector. The build-to-rent sector, however, remains uncertain of whether it will be brought within scope.
Building safety is a priority for the build-to-rent sector, and the sector has ensured that tenants are both safe and protected from any financial impact.
The British Property Federation has made this clear to the Government, and that it would be disproportionate to bring build-to-rent within this new tax’s scope, when build-to-rent investor-developers remain fully liable for remediation work and costs are not passed on to renters. Taxing the build-to-rent sector to enable remediation work in the homes-for-sale market would be unfair.
Over the last 10 years the residential rental market in the UK has evolved considerably, driven by investment from large institutional investors, such as pension funds, seeking long-term stable returns.
The build-to-rent sector, although still relatively new, is growing – with a pipeline now of around 200,000 homes over the next few years – and making a valuable contribution towards the Government’s ambition of delivering 300,000 new homes a year.
The counter-cyclical nature of the build-to-rent business model means that the sector has continued to invest and deliver throughout the pandemic, and right across the country, creating and sustaining jobs and supporting the Government’s levelling-up ambitions. This new residential property developer tax puts this at risk.
Ian Fletcher, Director of Real Estate Policy, British Property Federation comments:
“We welcome the exclusion of the purpose-built student accommodation sector from the new residential property developer tax. This will support new investment into modern and high-quality homes for students, and the higher education sector’s recovery and ambitions for growth.
“Policy decisions regarding the build-to-rent sector’s inclusion in this new tax have not yet been finalised – and we continue to argue for its exemption. The build-to-rent sector has not contributed to the building safety problems and the attributed financial disputes between freeholders and leaseholders, which this residential property developer tax is intended to fund.”