Landlords and letting agents have been urged to offer their ideas for a new tax relief system, after unpopular plans to cut mortgage interest relief were revealed in the summer Budget.
Chancellor George Osborne announced that landlords’ mortgage interest relief would be reduced to the basic rate of tax. This is set to be phased in between April 2017 and April 2020.
The Residential Landlords Association (RLA) believes that this would mean a landlord with a £150,000 buy-to-let mortgage for a property worth £200,000 would see their profit drop from around £2,160 per year to just £960.
Landlords and Agents Urged to Suggest New Tax Relief Ideas
This caused fears that landlords may stop using letting agents and increase rents as a result.
And David Smith, Policy Director at the RLA, has revealed that following a meeting with Treasury officials, the Government will be sticking by its plans.
However, he said that the RLA was asked to propose other tax solutions to the Treasury.
He explains: “The general feeling we are getting is that a U-turn is very unlikely, but that doesn’t mean we cannot push for it and we will do that.
“There is light at the end of the tunnel, but it may not be the same tunnel. I do not think he is going to draw back but I think there is the chance that a new relief could be produced, which could be good for the industry as a whole.”
The RLA is now calling on landlords and letting agents to suggest their own ideas for a new tax relief system.
It asks: “If you have alternative ideas on tax relief, then we would be happy to hear them, particularly if you can provide reasons other than just ‘it will save the landlord money’.
“For instance, allowing energy efficiency improvements to be written off against income as opposed to capital improvements will encourage landlords to invest in energy efficient measures.”1
Additionally, Smith has denied that a petition on the website Saynotogeorge.co.uk is failing. The petition had over 10,000 signatures last week, but has only gained 4,000 more since.
He adds: “10,000 was our first target and the next target is 100,000. I do not think that is a bad number, but people do have other things to do in August. We will continue to support it and are sure it will pick up into September.”1
The RLA will inform the Treasury of any proposals that it receives next month.
Landlords and letting agents are advised to email their ideas to: firstname.lastname@example.org
The RLA also has a tax campaign webpage, where landlords and agents can write to their MP: http://www.rla.org.uk/landlord/lobbying/tax/index.shtml