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Government challenged on tax changes that will cause ‘hardship for tenants’

The Chancellor Philip Hammond is being urged to use this week’s Budget announcement to alter pending changes to mortgage interest tax relief.

The existing rules that permit landlords to offset all of their mortgage interest against tax will, from this April, be phased out over the next three years until 2020/21.

Once mortgage interest relief has been withdrawn altogether, the consequences of Section 24 will mean that landlords will only be able to claim back a basic tax rate deduction of 20% off their tax bill, which will eat into their rental returns. 


The Residential Landlords Association (RLA) is among those against the pending changes to mortgage interest tax relief and ahead of this week’s statement, the trade body is challenging the government over suggestions that buy-to-let landlords are taxed more favourably than homeowners – a claim cited as a primary reason for introducing the controversial mortgage interest relief changes coming in next month.

RLA Chairman, Alan Ward, said: “We are now weeks away from a tax change that risks investment in new homes, and will cause considerable hardship for tenant.

“It is troubling that Ministers have not published any evidence to back up their assertions that landlords are taxed more heavily than home owners. This is no way to make policy.”

The RLA is writing to the Office for Budget Responsibility to provide clarification on the tax burden on landlords compared with homeowners.

“We call on the government to use the Budget this week to halt its planned tax changes which will do little to provide the new homes to rent they claim to want,” Ward added. 

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  • Mark Wilson

    I challenge the writers of these self-serving articles to explain why tax changes will not mean that Landlords will have to accept, and deal with, lower rents on their speculative investments.

    G romit

    The vast majority of Landlords do not make speculative investments (your implications being they want to sell again quickly to make a quick buck). Most Landlords are providing long-term homes for Tenants and they make their money from profits on the rents taken. Any capital appreciation is therefore many years down the line.

    The tax changes mentioned in this article affects profits against rental income and have nothing to do with capital gains which is now subject to higher CGT than any other asset class.

    When you are in many cases looking at actual rates of taxation on actual profits in excess of 100% then Landlords have no choice other than to increase rents markedly (20-30%) or evict & sell-up.

  • icon

    I have three buy-to-lets. I make little on them when you take into account the cost of repairs and tax I pay already, and that is before the increased tax liability. I am trying to provide some kind of pension for myself as have never been employed by someone that offers a pension scheme. At the same time I and many other private landlords like me provide much needed rental accommodation that is required in this county because of this and previous governments lack of investment in housing. You would think this would be encouraged but no, the government wants to penalise me for offering this service! Many private landlords like me with a small number of properties rely on mortgage funding and do not purchase them with cash and so the tax changes will have a big impact. Many will either have to increase rents or sell. Increasing rents will ultimately effect tenants and selling will reduce the number of properties available which in turn will push rents up.


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