The National Landlords Association (NLA) has once expressed its opposition to pending changes to mortgage interest tax relief ahead of the Budget statement in March.
The current rules that permit landlords to offset all of their mortgage interest against tax will, from April, be phased out, restricting the amount of mortgage interest landlords can offset against tax on their property investments.
By April 2020, once they have been withdrawn altogether, the disastrous consequences of Section 24 will mean that it is likely that higher-rate tax payers will only receive 50% of the relief that they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, which will eat into their rental returns as they will be required to pay significantly more income tax.
The trade body also issued three demands, in what is a rather low-key Budget submission, as it recognises that the government’s priorities lie elsewhere, acknowledging that it is ‘preoccupied with Brexit’ whilst the country’s finances are ‘stretched to breaking point’ with ‘multiple demands and unacceptably high debt levels’.
‘Therefore, whilst drawing attention to our past submissions in which we suggested alternatives to Section 24, in this submission we have only asked for three very specific things’, the NLA said in a statement.
The NLA’s demands are as follows:
1. The introduction a CGT cut or taper: The NLA argues that this will to help facilitate the disposal of poorly performing property and diversify people’s financial investment portfolio. The membership body has sent costings to the Treasury which show this need not be as expensive as some fear.
2. The extension of business asset rollover relief to allow restructuring of portfolios: It argues that this will facilitate increased sales of property and greater mobility between tenures, whilst allowing landlords to reduce the gearing of their portfolios, thereby protecting against market shocks and improving stability.
3. The reintroduction of the Landlords’ Energy Saving Allowance (LESA): New tenancies will not be allowed to be granted for properties with Energy Performance Certificate (EPC) ratings of F or G from April 2018. Following the collapse of the Green Deal, the NLA is urging the government to help mitigate the major capital costs over 300,000 landlords are facing in order to stay in business.