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From April 2017, landlords will see their mortgage interest tax relief gradually whittled down to nothing. Landlords will also have to pay a higher rate of stamp duty when they sell a rental property, and any gains they do make will be subject to a higher rate of Capital Gains Tax.
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Tax Changes Criticised
Not surprisingly, the government’s landlord tax changes have been the subject of criticism from numerous quarters, not least landlords. Now, though, a leading economics professor from Imperial College London has waded into the argument. Professor David Miles analysed the impact of the government’s tax changes and concluded they will make rental properties less favourable for tax purposes.
Professor Miles believes that a reduction of mortgage interest tax relief will hurt tenants as well as landlords. The loss of tax relief, combined with extra stamp duty, will force many landlords to raise rents to offset their extra costs. Professor Miles’ analysis found that rents would need to rise by 25% to offset the new tax changes. He states this will negatively affect the private rental sector, as landlords will pull out of the sector and supplies of affordable rental housing will fall. In his opinion, the tax changes should be abandoned.
Landlords Negatively Affected by Landlord Tax
The Residential Landlords Association agrees with Professor Mile’s analysis. Their research has found that the majority of UK landlords believe they will be negatively affected by the government’s tax changes.
