Tax changes will harm rental market in rural areas


Amanda Wiewiorka Owner / Company Director, Wardhaugh Property

With over 50 years’ experience, Wardhaugh has adapted to many changes in the housing rental market in Angus but we are currently facing a combination of tax changes which will hurt small investors, leading to an insufficient supply of suitable rental accommodation to meet demand in the area.

Unlike areas such as Dundee, where the largest demand is for flats, in Angus we see more families looking to rent larger homes.  The reasons for families choosing to rent are varied but can include the need to be flexible for employment reasons, concerns over interest rates or simply preferring not to be saddled with the extra responsibilities that come from owning a home.

Providing that type of quality housing in areas like Arbroath and Forfar, in common with other rural areas across Scotland, relies heavily on small investors.  Without the commitment of local landlords it is hard to create the necessary supply to meet demand.  Sadly, two new tax measures announced in London and Edinburgh have threatened our market here in Angus.

The first, dubbed the “Alice in Wonderland” tax, was announced by the Chancellor of the Exchequer at Westminster and restricts tax relief on residential properties owned by individual landlords to the basic rate of income tax.  This will disproportionately harm single-property and small portfolio landlords who, like other businesses, were previously taxed on profit but will now be taxed on their whole income.  I find it shocking that landlords with a small number of properties will be hit by this, whilst massive financial operations with thousands of homes under their control will be able to dodge this new tax entirely.

At the same time, the Scottish Government has announced that an extra 3% will be added to the Land & Buildings Transactions Tax (LBTT) for the purchase of second homes.  Whilst larger companies will be able to adsorb this cost through complex financial management, it will make life much harder for smaller players with tight margins looking to invest.

The joint effect of these changes could have a devastating effect on the rental market in Angus, driving small landlords out of the area and exacerbating the shortage of available properties.  I was recently speaking to one landlord who will be selling his portfolio of 4 properties very soon as a result of these changes.

At Wardhaugh, we are working to make sure our landlords are aware of these changes and doing all we can to make sure still feel able to maintain their properties in the area but it is difficult when many feel victimised and left at a significant disadvantage compared to the larger, impersonal investors from outside our community.

The importance of building a good reputation

Alex Bruce 04
Alex Bruce @alexandersbruce

“No such thing as bad publicity” goes the old adage. But for the construction sector, conveying the right image is increasingly critical.

Many companies don’t give their reputation much thought. After all, order books are full and clients seem generally happy so why worry?

While true for now, most contractors also know from bitter experience how fierce competition for new business now is and how perilously thin profit margins have become.

Against that background, a little investment towards managing your reputation and promoting your achievements can go a very long way when it comes to winning your next contract.

Faced with a choice between a contractor who can actively demonstrate their credentials through regular media coverage and public recognition and one who makes those claims purely on paper, the decision for the client becomes a very easy one.

The issue of reputation doesn’t stop at the front line of new business opportunities either.

One of the biggest issues industry employers now face is to find suitably skilled workers to work for them. Faced with an ageing workforce and a chronic shortage of new talent, recruiting and retaining the skills your business needs to grow is a real challenge.

Ironically, statistics show that the average salary of someone working in the construction sector compares very favourably with other sectors of the Scottish economy, surpassed only by banking, finance and offshore oil and gas.

But preconceptions about the industry and career prospects within it have proved very difficult to shift. Careers advice in schools has come in for some sharp criticism from the industry in recent times. Some of it is entirely justified as politicians have sought to reduce the skills issue to a headline-grabbing apprenticeship numbers game.

Sadly, there is a lack of recognition for the superior quality of the four year indentured apprenticeship framework offered as standard in the traditional building trades. In that context, measures such as the suggested introduction of foundation apprenticeships risk devaluing the qualification and real damage to the development of specialist construction skills.

At the same time, the tradition of local officers from CITB going out and regularly banging the industry drum in local secondary schools seems to be on the way out as CITB’s remit adapts to new UK Government proposals for an apprenticeship levy on all large employers.

Hence, there is a growing expectation that building sector employers should be carrying out this missionary work themselves. What is more, your skills search will be that much easier if you can get in front of school pupils at an early stage and convince them why they should choose a career not only in the construction industry generally but with your company in particular.

Ultimately, it could mean the difference between having enthusiastic candidates approach you proactively about employment opportunities and having to go out and find those candidates, only to find they’ve already been put off a career in construction by their careers adviser – or worse yet, they’ve already taken an apprenticeship with a competitor that did take the trouble to come and talk to them in school when they were starting to think about careers.

What’s more, once recruited, your workforce needs to know they’re working for a company they can take pride in. Sustaining and promoting your company’s reputation is equally important to maintain internal morale and get the very best out of your team.

More than many other industries, building sector employers frequently suffer from having their own reputations tarnished by the poor practice of a small minority of rogue traders.

Once again, making the extra effort to manage your own company’s reputation can yield big returns with potential customers spooked by horror stories of botched jobs and bills spiralling out of control. At the sharp end, it could make the crucial difference between them going ahead with the work or putting it off for another day.

Whether to give you that crucial edge in the competition for new work, to attract and retain the skills and talent your company needs for the future or give customers the confidence they need to appoint you, managing your reputation and actively promoting your business has never been more crucial to future success.

This article first appeared in Project Scotland.