A pleasing new survey has revealed that two-thirds of buy-to-let landlords in Britain understand their ability to offset mortgage interest payments against tax is to be cut by the Government.
Research from YouGov on behalf of the Council of Mortgage Lenders shows that nearly one in five landlords plan to raise rents in order to lessen the impact. One in ten said that they would leave the sector for good.
In addition, the report indicates that three quarters of current buy-to-let landlords find it easy to make mortgage payments. However, 25% said factors such as Stamp Duty have prevented them for expanding their portfolio.
It was announced in 2015 that the ability to deduct the full amount of mortgage interest tax relief would be phased out. By 2020, just 20% of landlords’ mortgage interest will be tax deductible.
Two-thirds of respondents said that they were aware of these changes, with the majority seeing it as detrimental to their business. For higher-income landlords over more than £100,000 per year, 80% said that they were aware of the changes.
Of the total people polled, 30% said that they did not feel that the changes would affect them.
When asked about what measures they would take to get around the higher bills, raising rents was the most common plan. 19% said that they would do this, with 5% saying that they already had. One in four investors said that they would undertake more frequent rent reviews.
Nearly one in five investors are considering switching the ownership of their property to a corporate structure, while one-third are looking at remortgaging.
As of January, new buy-to-let mortgage applications have been subject to a more stressed interest cover ratio, to make sure borrowers can continue with repayments should interest rates rise.
80% of respondents said that they could manage an interest rate rise of 1.5% in the next three years. 74% said it is easy or very easy to afford their mortgage repayments.