Ahead of today’s first Conservative only budget in over twenty years, the National Landlords Association has issued a warning that costs could spiral in the private rented sector.
The NLA’s concern surrounds the issue of buy-to-let mortgage interest payments possibly being made non tax-deductible. The firm believes that this means costs could rise to as much as £2.6bn.
In a letter addressed to Chancellor Osborne, Chief Executive of the NLA Richard Lambert said that any move to make mortgage interest payments non tax-deductible would be detrimental to the UK economy. Lambert believes that the proposed changes would only put increased pressure on the value of housing.
‘It has been suggested that private landlords receive too many ‘perks’ or reliefs which give them an unfair advantage compared to owner-occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently? Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others.’
NLA warns over changes to mortgage interest payments
Rise in rents
Having used figures compiled by the Council of Mortgage Lenders from the back end of 2014, the NLA suggests that costs in the private rented sector could increase by up to £2.6bn, should mortgage interest payments be reclassified as non-deductible. The firm warns that should this become law, landlords would be left with no option but to raise rents.
Concluding his letter to the Chancellor, Mr Lambert said that his firm was seeking, ‘an unequivocal reassurance that the Government will continue to regard buy-to-let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future.’