Impact Of UK Landlord Tax Changes Revealed
by Robert Lee, Lowtax.net, London
17 September, 2015
44 percent of UK landlords plan to increase the rent they charge to offset the losses incurred from tax changes announced at the Summer Budget, according to a survey by accommodation website EasyRoommate.
In July, Chancellor George Osborne announced that the mortgage interest relief individual landlords can claim on residential properties will be restricted to the basic rate of income tax (20 percent). From April 2016, the wear-and-tear allowance, which allows landlords to reduce the tax they pay regardless of whether they replace the furnishings in their property, will be scrapped in favor of a new system that only provides relief when furnishings are replaced.
Karim Goudiaby, EasyRoommate's Chief Executive Officer, said: "I believe that the buy-to-let tax changes will make investments a less appealing proposition for landlords and discourage investors. This increase in tax will drive landlords to recoup their losses, and what a better way of doing that other than by increasing rent."
According to Goudiaby, the abolition of the wear-and-tear relief will result in landlords reducing the levels of general property maintenance and improvements and neglecting basic tenant demands for property improvements. He also fears that the reforms "could drive some landlords out of the property market given it will no longer be the profitable business it once was. Many landlords may now see fit to sell their property for let, resulting in tenants evicted from their rented accommodation."
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