Buy-to-let landlords suffering tax increases plan to raise rents
Buy-to-let owners have been hit with a number of law changes over the past two years, which have forced rental investors to pay more money to HMRC.
But it’s the economy and tenants that could end up paying the price.
More than a third of landlords are desperately looking to cut costs, while a fifth will pass on the increases to tenants, according to a study by mortgage lender Kent Reliance.
Landlords contribute around £15.9billion to the economy, supporting thousands of jobs in property maintenance, the research found.
Buy-to-let owners now spend double the level seen in 2007 at the height of Britain’s housing market, working out at around £3,632 before tax.
But now many are set to scale back, which could hit tradesmen and other professionals in the property industry, said Kent Reliance.
It comes after relief on borrowing costs has been reduced to the basic rate of income tax, and over the next three years will be cut to zero.
Buy-to-let owners have also been restricted for tax relief claims on wear and tear.
Furthermore, second home buyers must now pay additional stamp duty.
John Eastgate, sales and marketing director at Kent Reliance, said: “Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy.
“Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs – whether builders, cleaners, lawyers and accountants or letting agents.
“Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government’s tax raid, or both.
“One side effect of the recent changes, and rising running costs, will be the professionalisation of the sector as amateur and accidental landlords leave the market. There is nothing wrong with having fewer, bigger landlords, but that alone will not help more young people get homes.”
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