Today’s tax relief changes for landlords will make renting more expensive for tenants, warns the Residential Landlords Association (RLA).
The measures being introduced from today will make renting less affordable and stifle investment in homes to rent, making it more difficult for tenants to find suitable accommodation, according to the landlord body.
The warnings arrive as the Government begins to restrict tax relief on finance costs for landlords and tax their turnover rather than profit.
A survey by the RLA has found that two thirds of member landlords feel they will need to raise their rents to cope with the new tax burden. The results also show that 58% of landlords plan on cutting back investment in property.
Independent experts believe that landlords will need to increase rents by between 20-30% to mitigate the impact of the tax relief changes.
Ministers have argued that the measures level the playing field between landlords and homeowners, but the respected Institute for Fiscal Studies claims that the tax system “is not, and was not, even before the recent changes, more generous to people buying to let”.
The Chairman of the RLA, Alan Ward, says: “Today’s tax increases contradict everything the Government has said about needing a larger rented sector to give tenants more choice and more affordable housing.
“It is tenants who will be hit hardest by these punitive tax increases. Aside from likely paying more in rent, in many places, they will face a growing shortage of affordable places to rent.”
He adds: “We call on ministers to undertake a major review of the impact of this policy and, if all the predictions about its impact are right, to abolish the changes in the Autumn Budget.”
Landlords, if you think that you will have to put your rents up to mitigate the tax relief changes, be aware that your tenants may struggle to pay the higher costs.
As such, you must protect your rental income with Rent Guarantee Insurance, which ensures you still get paid if your tenants fall into rent arrears: https://www.justlandlords.co.uk/rentguaranteeinsurance