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Draconian tax changes will force landlords to ‘evict tenants’ or ‘increase their rents’

Draconian tax changes applying to buy-to-let investors will leave many private landlords with little alternative but to evict tenants and sell properties en masse or simply increase rents for tenants, according to according to Paul Smith, chief executive of Touchstone Education, which runs courses in property investment across the UK.

There are growing concerns that many landlords will simply not be able to cope with the phasing out of mortgage interest relief in the new year when punitive tax hikes introduced by former chancellor George Osborne (pictured) start to have an adverse impact.

Many private landlords have already had to endure the scrapping of the ‘wear and tear’ allowance, launch of the 3% stamp duty surcharge (Land and Buildings transaction Tax in Scotland), not to mention the introduction of stress tests for buy-to-let mortgages.

In January, many landlords will face significantly higher income tax bills, with the first stage in the phasing-out of mortgage interest tax relief on rental income, and Smith fears that this could spell disaster for thousands of buy-to-let investors.

Somewhat worryingly, a survey by Tenant Referencing UK earlier this year found that 70% of landlords were unaware of the changes, contained in Section 24 of the Finance Bill 2015-16.

At the same time, headline rates of capital gains tax paid on profits from asset sales were cut from 18% to 10% for basic rate taxpayers and from 28% to 20% for higher rate taxpayers.

Smith said: “These changes are so draconian that landlords have been left with no choice but to evict tenants and sell-up or to increase their rents.

“Thousands have already exited the buy-to-let market, switching their investments into commercial properties or serviced accommodation.

“Those who remain will now have to pay significantly higher Income Tax bills for the first time and we know from those attending our courses, most are unaware of the changes.

“Landlords who file income tax returns at the end of January will have to pay-up the following day and many don’t know that they are sleepwalking towards bankruptcy.”

Poll: Do you agree that draconian tax changes applying to buy-to-let investors will leave many private landlords with little alternative but to evict tenants and sell properties en masse or simply increase rents for tenants?

PLACE YOUR VOTE BELOW

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    The government may be breaking the law on business,by taxing landlords differently to other businesses.
    It will come back to bite them !!!!!!!!!!!!!!!!!!!

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    Higher rents and more homeless, really clever move by the government.

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    I agree but shudder at how much worse a loonier Corbyn government would make things!

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    no worse than mays mob!

     
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    We already have a loony left winger in charge of the Welsh Assembly.
    I am sure that he would give comrade Corbyn his full support.
    With the devolvement of more tax raising powers being given to the WAG I am sure that we are going to experience your worst fears sooner.

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    the wa is just that--its not a govt

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    Terry. You made the same comment about Holyrood. Unfortunately in Scotland it's taken the title government and Westminster has given it carte blanche to screw everyone earning over £26k with a marginal effective tax rate of up to. 61%.

     
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    Another pile of poo

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    I do know in Coventry, the council used to spend £1.2m on homeless Pre section 24, that Bill is now £4.3m. Not much savings there much cheaper to pay £500 rent than £50 a night at £1,500 a month....easy business maths!!

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