Landlords in the UK want the Government to make a U-turn on changes to tax relief on buy to let mortgages, a new survey has found.
The vast majority of landlords, nine out of 10, say they fully understand the implications of the tax changes and they would prefer them to be reversed, according to the latest private rented sector trends report from Paragon Mortgages.
The tax changes, announced in the 2015 Summer Budget by then Chancellor George Osborne, are being phased in over three years from April 2017 and mean higher rate taxpayers can no longer offset all their mortgage interest against rental income before calculating the tax due.
When asked what action the newly elected Government should take, the majority said they want a reversal of the income tax relief changes, while they also said they want no further change as they believe the sector needs some stability.
The third most popular action landlords would most prefer the new Government to take is an exemption from capital gains tax and stamp duty for landlords moving properties into a limited company structure, a strategy that 11% of landlords reported having already taken to help mitigate the impact of the tax changes.
The survey also found that 20% of landlords aim to increase rent to combat the changes, 20% also aim to sell property from their portfolios and not buy any more and 18% plan to repay some or all of the mortgage.
The research show that 88% of landlords say they now understand the personal implications of the tax changes, up from 71% six months ago and the highest reported figure since the question was first asked in the fourth quarter of 2015.
‘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,’ said John Heron, managing director of Paragon Mortgages.
‘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,’ he added.
