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The announcement by chancellor George Osborne that tax breaks for landlords would be reduced from next year was a huge blow for many people operating in the buy to let sector. Industry experts believe that the loss of valuable tax breaks could mark a decline in the buy to let sector as landlords see their profit margins fall.
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RLA Concerned
The Residential Landlords Association is one of the organisations to express concern about the chancellor’s proposals. The RLA believes that the private rental sector should be treated no differently to other business sectors, but it seems that their concerns have fallen on deaf ears.
Government Response
Financial Secretary to the Treasury, David Gauke, has written a letter to the RLA saying that the government’s tax proposals are essential if a “fair tax system” is to be established in the UK. His reply is fairly uncompromising to say the least.
“Landlords will continue to get full income tax relief on the costs incurred in letting out a property, such as letting agency fees and replacing furniture, as others do on the costs they incur in carrying out a trade,” Gauke says.
He adds that: “Finance costs are different as having a mortgage on a property also allows the landlord to purchase a more expensive property and incur larger gains on the investment than they would without the mortgage. The government wants to rebalance relief for these finance costs and ensure that all individual landlords get finance cost relief at the same rate.”
