A new survey of over 200 private landlords from Paragon Mortgages has revealed that the majority of landlords would like to see the Government reverse alterations to tax relief.
The amount that landlords can claim back against tax is being phased out from April 2017, meaning that by April 2020, landlords will only be able to claim back a basic rate.
Tax Changes
Understandably, many buy-to-let investors would like to see a reversal of these changes.
In addition, many want to see the 3% stamp duty surcharge for buy-to-let and second properties scrapped.
According to the survey, one of the most common actions carried out by landlords in the second quarter of this year was to increase rents. 20% decided to sell up and 18% decided to repay some, or all, of their mortgage.
This shows that the alterations are having a detrimental impact on the sector and Paragon is urging the Government to do more.
In addition, 88% of landlord asked said that they now understand the implications that the changes could have on their business. This is a rise from 71% six months ago.
More calls for tax changes to be reversed
Challenges
John Heron, managing director at Paragon Mortgages, noted: ‘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.’[1]
‘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 PRS continues to perform well,’ Mr Heron added.[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/buy-to-let-tax-u-turn-needed-to-ensure-prs-continues-to-perform-well