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Tax rules stifle partnerships between for-profits and traditional social landlords, says L&G Affordable Homes boss
The chief executive of L&G Affordable Homes has told Inside Housing that tax rules governing the sector need to be refreshed to support partnership working and investment.
Ben Denton stated that he believes the changes are necessary because tax legislation has not been updated to contemplate institutional investment in affordable housing, which he said stifle investment from flowing into the sector.
He said for-profit providers that receive grants to allow homes to be sold or rented at a discount to the market are taxed on the receipt of the grant, meaning some of the subsidy provided is directly collected by the Treasury.
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He added that grants received by for-profits should be treated in the same way as non-profit providers.
Where a for-profit builds affordable housing with grant, it pays no stamp duty land tax (SDLT). But when it develops affordable housing without grant, it pays SDLT.
Mr Denton explained that non-profits do not normally pay SDLT where they benefit from its exemptions, so “it would be sensible” for all housing providers to bear no SDLT.
When a for-profit and non-profit collaborate in an LLP structure to develop affordable housing, the SDLT, VAT and tax rules clash and in some cases stand in the way of building affordable housing, he said.
Mr Denton said: “It’s time to look at the regulatory and tax environment afresh to ensure these new partnerships fit within a legislative framework which supports investment and growth.
“We are working within a legislative framework designed before institutions and not for profit RP’s [registered provider] had contemplated setting up these partnerships, and we do need a more permissive environment if these growth opportunities are to be landed.”
Neither the Treasury or HM Revenue and Customs responded to a request to comment.
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