A leading housing expert has warned that families may lose their homes as a result of forthcoming landlord tax changes.
Dame Kate Barker, a former member of the Bank of England’s Monetary Policy Committee – who authorised an independent review of UK housing supply for the Government – issued the warning to the Treasury Select Committee earlier this week.
Questioned about the impact of recent landlord tax changes, she warned that the reduction in mortgage interest tax relief will affect existing housing stock, which is a danger to families “who have been living in a house for some time and have been paying their rent”. She believes they could find themselves being forced to move “because the buy-to-let landlord no longer finds the yield acceptable or can’t afford it”.
Government data shows that 37% of households in the private rental sector have children.
From 6th April 2017, mortgage interest tax relief will begin to be cut to the basic rate of income tax for buy-to-let investors, and landlords will be taxed on their income rather than profit.
Barker’s comments arrive just weeks after the Redfern Review for the Labour Party into declining homeownership warned that “hostility to landlords” and “increasing uncertainty about their tax treatment” could “reduce investment in the private rented sector”.
The Residential Landlords Association (RLA) is calling for protections for tenants already in rental housing, by applying the landlord tax changes only to new borrowing, rather than to existing holdings.
The Chairman of the RLA, Alan Ward, says: “Dame Kate’s warning is a sober reminder of the potential social consequences of forthcoming changes to mortgage interest relief.
“These changes pose real risks for tenants where their landlord is simply unable to afford the extra costs being imposed on them, and has no option other than to sell a property.”
He adds: “Even at this late stage, we would call on the Government to apply the changes only to new borrowing.”
While we are unable to prevent investors from leaving the sector or increasing rents as a result of the landlord tax changes, we are joining the fight against homelessness with our latest competition.
We have teamed up with Shelter to launch a Christmas competition – Simply take a photo of your festive property, upload it to Facebook or Twitter using @JustLandlords and #JLChristmas and we will donate £1 to the charity per entry!
Get involved now and help to prevent families losing their homes.