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Landlords Call on Government to Reverse Tax Relief Changes
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Landlords have called on the new Government to reverse tax relief changes, according to the latest PRS Trends Report from Paragon Mortgages for the second quarter (Q2) of the year, which is based on interviews with 201 experienced residential landlords.
Landlords Call on Government to Reverse Tax Relief Changes
The mortgage interest tax relief changes, announced in the 2015 Summer Budget by then chancellor George Osborne, are being phased in over three years, from April 2017. They mean that higher rate taxpayers can no longer offset all of their finance costs against rental income before calculating the tax due.
Following last month’s General Election, Paragon Mortgages asked landlords to rank the action they would most prefer the new Government to take to help with their lettings businesses. The highest-ranking answer was to reverse tax relief changes.
The second highest answer was for no more change, in favour of a period of stability following a turbulent two years, which also saw the introduction of a 3% Stamp Duty surcharge for additional homes from April 2016.
The third most popular action landlords would like the Government to take is an exemption from Capital Gains Tax (CGT) and Stamp Duty for those moving properties into a limited company structure – a strategy that 11% of landlords reported having already taken in Q2 2017 to help mitigate the impact of the tax relief changes.
The survey also found that 20% of landlords have increased rents in Q2, while the same number have sold properties and plan to buy no more, and 18% have repaid some or all of their mortgages.
This comes as 88% of landlords – up from 71% six months ago – say they now understand the personal implications of the tax changes. This is the highest reported figure since Paragon first asked the question in Q4 2015.
John Heron, the Managing Director of Paragon Mortgages, comments on the findings: “Having taken active steps in preparing for a difficult period of transition as the tax relief changes continue to be phased in, landlords are now facing up to the challenge ahead.
“Higher tax charges for landlords have combined with a general increase in uncertainty to drive confidence levels down. However, whilst there are signs of lower demand, it would appear that property yields are being maintained and that void periods are close to historic lows. This would suggest that, despite the negativity around the market, that the private rental sector continues to perform well.”
Would you like to see the Government reverse tax relief changes?
