Single property landlords hit most by tax changes

The most recent report from the National Landlords Association indicates that single property landlords are beginning to feel the impact of the changes to mortgage interest tax relief.

Data from the analysis shows that the proportion of single property landlords who believe they will be moved into a higher tax bracket has almost doubled since the back end of 2016.

Tax Changes

The phasing out of mortgage interest tax relief started last month, with buy-to-let landlords now only able to offset a proportion of their income.

16% of landlord asked now feel they will be moved into a higher tax bracket as a result- a rise from 7% in the final quarter of last year.

At present, the average yearly mortgage finance costs for landlords with a single property is £5,600.

This means that those earning just below the upper limit of basic income tax threshold of £43,500 may well be pushed up into the higher bracket of 40%. If this occurs, these landlords will be exposed to much more tax liabilities.

Single Property Landlords

Landlords letting out a solitary property make up the majority of UK landlords, representing around 62% of the UK landlord population – or 1.5million.

The tax changes are set to impact on 368,000, with young couples and families particularly vulnerable should some landlords look to sell up as a result.

Predictions from the National Landlords Association indicate that single property landlords would need to raise rents by over 11% in order to continue making a substantial yield from their investment. This could amount to £116 per calendar month for the typical rental property.

Single property landlords hit most by tax changes

Single property landlords hit most by tax changes

Waking Up

Richard Lambert, Chief Executive Officer at the NLA, observed: ‘Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years.’[1]

‘21% of landlords with just one property do not make a profit, and over the next few years those bumped up a tax bracket will find that their ability to continue to provide good quality housing will be seriously affected,’ he continued.[1]

Concluding, Mr Lambert said: ‘More and more families and young couples are making their home in the private rented sector because they cannot either access social housing or afford to buy their own home. Affected landlords will have the choice of either increasing rents or selling up – so either way it’s the people they currently home who look likely to suffer the most as a result of this damaging tax change.’[1]



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