There have been further calls for the Government to reconsider its proposed tax-relief changes for the buy-to-let market which are scheduled for April. The calls come amidst growing fears that landlords will be forced to sell or increase rents as a direct result of the alterations.
Existing rules permitting landlords to offset all of their mortgage interest against tax will be phased out from this coming April. This process will be completed by April 2020, where it is likely that higher-rate tax payers will be in receipt of only 50% worth of their current relief.
After yesterday’s publication of the much-anticipated housing White Paper, an industry peer has had his say.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, has welcomed the Government’s commitment to increase the supply of affordable stock in the private rental sector. However, he points out that a lot of current housing stock in the private rented sector could be lost, unless greater support is offered to landlords.
Weaver observed: ‘The new commitment to boost the supply of affordable rental stock is clearly a sage one and if successful will help ensure that rental prices remain in check with wages, and other prices in the economy.’
‘We welcome the tougher action promised against rogue landlords making the rental market a safer, more secure place for tenants. Fair rents, improved rights for tenants and first-class professional management is something we fully support. But it needs to be effective and not an additional burden to the good landlords, as the landlord selective licensing scheme seems to have been,’ he continued.
Raise or Sell
Mr Weaver fears that both upcoming and existing tax changes could lead to many good investors not willing to take the plunge and take out landlord insurance on a property.
He also believes that the majority of landlords will be faced with little option to either sell up or increase their rents-thus impacting on tenants.
‘Traditional landlords are suffering from recent tax changes including cuts in mortgage interest relief due to kick in this April. With increasing constraints on making a profit or even balancing the books, buy-to-let investors could be forced to either sell up or increase rents,’ Weaver concluded.