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Tax breaks for landlords needed to keep them in the market

A raft of ‘anti-landlord’ policies introduced by the government have prompting concern that buy-to-let landlords with low profit margins could end up making a loss as a result of various tax changes, which will push some out of the market altogether.

The introduction of the 3% stamp duty surcharge, the scrapping of the 10% ‘wear and tear’ tax relief, and the fact that mortgage tax relief is currently being phased out, means that landlords simply need a break a tax break, according to Paul Shamplina, founder, Landlord Action.

He explained: “Many of the anti-landlord policies introduced over the last two years are now starting to impact private landlords, leaving many to consider selling up or increasing rents, both of which will be detrimental to tenants. The market needs to increase not decrease the supply of housing and the only way to do that is to offer incentives to landlords.


“Tax breaks for landlords who offer longer-term tenancies would be welcomed.  However, landlords will also need greater assurances that if their tenant breaks the terms of their agreement, landlords can evict them more efficiently than the present system allows.”

But Sarah Bush, director, Cheffins is concerned that the Chancellor Philip Hammond may be planning to introduce further caps on second homeownership.

“After having been in the spotlight for many months now, the letting industry could also come under fire,” she said.

Communities Secretary Sajid Javid suggested at the Conservative Party Conference in September that the Chancellor might launch incentives for landlords to offer 12 month tenancies, along with a new housing court, making letting contracts fairer for both parties.

“Whilst these would be helpful in principle, landlords are being weighed down by new taxation and costs and the government needs to consider breaks and incentives to keep private landlords in the marketplace,” Bush added.

But instead of offer landlords a tax break, speculation is growing that the Chancellor will actually take measures to stop buy-to-let investors purchasing property via companies.

One way round the mortgage interest relief loss has been to set up as a company. Mortgage interest can be offset against tax where the borrower is a corporate structure, and the number of landlords incorporating has rocketed.

Although the rules would be difficult to draw up and apply, it is possible that Hammond could extend the loss of tax relief on mortgage interest to incorporated buy-to-let investors. This would naturally have wider consequences for tenants and the housing market.

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    "The market needs to increase not decrease the supply of housing and the only way to do that is to offer incentives to landlords."
    This suggests that reducing the number of houses in the private rented sector is some how reducing the supply of houses, which is a total nonsense. If landlords decide to sell properties, these properties don't vanish in a puff of smoke, nor do they sit empty in perpetuity.
    They'll be bought by the next landlord who can afford it, or by an owner occupier.
    In actual fact, the only way to increase the supply of housing, it to build more houses.
    Incentivising landlords to buy more properties or even just hang on to the ones they have is no more than tinkering with the tenure types of the existing stock.


    This is exactly the sort of comment which demonstrates without a shadow of a doubt that you do not have a clue.

    Houses sold by PRS landlords do not tend to be magically swept up by needy first time buyers. That is because the average deposit (£90k in the SE) is now so high most FTB's cannot hope to afford it. Add to that stamp duty, mortgage arrangement fees, survey fees, legal fees etc and the fact that bank's are reluctant to lend and you've pretty much got a perfect storm for FTBs.

    PRS landlords are neither fools nor masochists and will not continue to invest in a sector that is no longer viable. Therefore they are not likely to buy up these now available properties. That will be done by big housing corps. And you just have to look at the utilities sector to know what will happen when that takes hold.

    As for those who simply do not wish to buy. Hhhmmmm. I guess they'll just have to sleep under a bridge.

    Yep. You really are the expert.

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    The fact that you suggest properties offloaded by private landlords will be bought up big housing corps supports my original point, "They'll be bought by the next landlord who can afford it". Whether this is a private landlord who can buy with cash and doesn't need to highly leverage themselves or a big housing corps is irrelevant. As I said, houses don't disappear once they cease to be in private rented tenure.
    If what we're concerned with is increasing housing supply then we need build more houses. What the article seems to be about though is pointing out what a hard time landlords are having lately, and trying to suggest that giving them a tax break is somehow going to fix a shortage of housing. It's simply not, the housing crisis existed before Clause 24, before an extra 3% on second homes, and before 10% wear and tear allowance was taken away.

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    I think you are all wrong. I was a first time buyer when Harold Wilson's socialist circus closed down the private rented sector with the same crass collections of wonderful laws. There were tens of thousands of small properties vacant , unsold and unsellable.

    They were no use to landlords because there could be no profit in consequence of the laws.

    They were no use to first time buyers because they would never be able to sell them on when the wife announced some exciting family news.

    They were no use to mobile workers for the same reason again.

    Nobody would let them because of the risk of a bad tenant moving in ans sitting there rent free for as long as they wished and expecting free maintenance every time they trashed the houses.

    We had exactly the first time buyer cash problems which the current generation think are a brand new phenomenon.

    To stress the point:

    Me and the misses camped near an area where we wanted a house. It turned out to be a late snowfall weekend like the one we have just had. Our tent was very cold but we were able to carpet it with a thick layer of estate agents property flyers. They were so desperate to find buyers they just gave us every leaflet they had in the office. In fact it was worse than that. Some properties had been placed with four or five agents.


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