Private landlords believe that this week’s Autumn Statement provides the chancellor Philip Hammond with an opportunity to bolster activity in the buy-to-let market, which has slowed in recent months largely as a consequence of the previous chancellor’s tax changes.
A wide range of topics have been talked about ahead of Wednesday’s announcement, but it is mortgage interest relief that has been identified as the top issue for buy-to-let landlords, according to fresh research conducted by Martin & Co, one of the UK’s largest letting and property management agents.
As many of you will know, the existing rules that permit landlords to offset all of their mortgage interest against tax will, from April 2017, be phased out, restricting the amount of mortgage interest landlords can offset against tax on their property investments. But more than 50% of buy-to-let landlords would like the chancellor to remove punitive changes in mortgage interest tax relief.
By April 2020, once mortgage interest relief has been withdrawn altogether, the disastrous consequences of Section 24 will mean that it is likely that higher-rate tax payers will only receive 50% of the relief that they currently get, with various experts having already warned that landlords will be left with little alternative but to pass higher costs on to tenants.
The National Landlord Association estimate that around 440,000 basic-rate tax payers will be forced into a higher tax bracket from April 2017 once planned changes to landlord taxation comes in to force.
“With the chancellor preparing his Autumn Statement as we speak, the results of our Big Landlord Survey 2016 are a timely reminder that concerns are growing amongst the landlord community, and that they’re centred far more around the impact of policy-led changes than Brexit,” said Ian Wilson, chief executive of Martin & Co.
Many buy-to-let landlords would also like to see this year’s stamp duty changes scrapped in the Autumn Statement.
Following a stampede of buy-to-let activity earlier this year ahead of the introduction of the 3% stamp duty surcharge on additional homes in April, including buy-to-let homes, fewer investors are now adding to their property portfolios.
The latest seasonally adjusted monthly figures compiled by the Council of Mortgage Lenders show that the amount buy-to-let landlords borrowed fell on an annual basis, dropping 22% year-on-year to £2.8bn in September with the number of loans falling 6% from the previous month to 18,200 and representing a decline of 26% on September 2015.
Wilson continued: “These are savvy businesspeople who are simply trying to supplement their income and do the best by their families, and they’re showing real fortitude and cool heads at a time when other sectors are seeing hasty decisions.”
“These are hard-working people simply looking at enhancing their income and their lives a little, and I’d urge the chancellor to make sure that they don’t get clobbered yet again,” he added.