Instead, a 20% tax relief on mortgage interest payments was implemented, a change that has severely reduced the profitability of buy-to-let investing, along with a string of other legislative changes such as an increase to buy-to-let stamp duty costs and, more recently, changes to Capital Gains Tax allowances.
London lettings and estate agent, Benham and Reeves, has backed a petition calling for the government to reinstate tax relief for landlords, allowing the full amount of mortgage interest to be set against rental income before tax is calculated.
The petition has already gained over 19,000 signatures and can be found here:
Marc von Grundherr, Director of Benham and Reeves, commented: “Rather than commit to solving the housing crisis and build more homes, the government has looked to bring about a short-term fix by forcing landlords to sell up and exit the buy-to-let sector. This has been orchestrated via a number of legislative changes designed to dampen the financial returns available to investors.
"Of course, the consequence of this is a reduction in suitable rental properties and with the sector already in dire need of more stock, it’s the nation’s tenants who are paying the price. High demand is already pushing rents ever higher and as more landlords exit, this problem will only get worse while the quality of available accommodation will also continue to decline.
"While the Build to Rent sector certainly fills a need in the modern market, the government would be ill-advised to pin all of its hopes on this emerging market. Build to Rent rental values are considerably higher than those found within the wider PRS and so the average tenant simply can’t afford them.
"We’re urging the government to reconsider just one of their recent changes and allow landlords to once again deduct their mortgage interest from their rental income and we’re not alone. A survey of our landlord base found that 73% of those who have plans to exit the sector would refrain from doing so if these changes were reversed.
"It’s time the government realises that the nation’s landlords are the backbone of the private rental sector, but it’s simply not realistic to expect them to play such a vital role if it’s not financially viable.”
