It’s been another week of worrying news, with landlords departing from the sector, transactions falling and house prices turning.
I found it particularly telling that half of landlords are now using Section 21 evictions in order to sell their properties, a sign that affordability is taking its toll on the nation’s investors.
As I’ve discussed before, I am in favour of getting rid of Section 21, however the government needs to make sure the Section 8 evictions route is up to scratch to compensate.
Alongside the Section 21 change I’d like the government to have another look at mortgage tax relief.
Since April 2020 buy-to-let landlords have been asked to pay tax on all their rental income while only receiving a tax credit worth 20% of their mortgage interest payments.
I understood why the government wanted to rebalance the housing market in favour of owner occupiers, but taxing landlords so heavily on their income rather than their profit may have pushed the pendulum too far in my opinion. We already had the 3% stamp duty surcharge for investors.
It’s getting to the point where it’s unaffordable for all but landlords who own their properties outright to rent out their stock, which is limiting UK rental supply.
Some are reportedly thinking of leaving the market thanks to future regulatory changes, but to me the ones that have already happened hurt the most, while higher mortgage rates make everything hurt more.
I think it speaks for itself when the Intermediary Mortgage Lenders Association, often such a level headed organisation, is becoming more vocal about ‘discriminatory policymaking’ against landlords.
The signs are clear.
Landlords are being pushed out by too many hostile policies all at once, and to me mortgage income tax relief is the first thing you’d change if you wanted to throw them a bone – at a time when the evictions process will get trickier.
