The government is being urged to reconsider punitive tax relief changes for buy-to-let income which is set to be introduced in April in order to prevent landlords from being “forced to either sell up or increase rents”.
The existing rules that permit landlords to offset all of their mortgage interest against tax will, from April, be phased out, and by April 2020, once they have been withdrawn altogether, it is likely that higher-rate tax payers will only receive 50% of the relief that they currently get.
Following the publication of the housing white paper yesterday, Rob Weaver, director of investments at property crowdfunding platform Property Partner, welcomed the government’s commitment to increase the supply of affordable rental stock, but pointed out that much of the existing housing stock in the PRS could be lost unless landlords are offered greater support.
“The new commitment to boost the supply of affordable rental stock is clearly a sage one and if successful will help ensure that rental prices remain in check with wages, and other prices in the economy,” said Weaver.
He added: “We welcome the tougher action promised against rogue landlords making the rental market a safer, more secure place for tenants. Fair rents, improved rights for tenants and first-class professional management is something we fully support. But it needs to be effective and not an additional burden to the good landlords, as the landlord selective licensing scheme seems to have been.
“Traditional landlords are suffering from recent tax changes including cuts in mortgage interest relief due to kick in this April.
“With increasing constraints on making a profit or even balancing the books, buy-to-let investors could be forced to either sell up or increase rents.”