Changes due to be made to the UK’s buy-to-let tax rules will push over 400,000 basic-rate landlords into a higher tax bracket, says the National Landlords Association (NLA).
This is more than the ‘small’ number the government said would be affected by the changes, which severely reduce the mortgage interest payments and other finance related costs landlords have been able, until recently, to deduct from their business costs before declaring their taxable income.
NLA chief executive Richard Lambert has described the government’s claims that the changes will have a low impact as “complete tosh” and has met with Housing Minister Gavin Barwell to discuss the problem.
Lambert urged the minister to consider amending the rules to reduce the impact on landlords and that this could be “easily achieved by applying the rules to only new loans written after April 2017”.
“Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell-up, and force their tenants to find a new home,” he says.
Landlords operating on only small profit margins are likely to be the ones most worried by the tax changes, which the NLA estimates will increase the tax liability of a single-property landlord by £3,600 and for someone with two to three properties, £8,600.
The NLA hopes to escalate what is sees as a looming crisis when it meets Financial Secretary to the Treasury Jane Ellison soon.