New borrowing burdens for landlords

A survey by the National Landlords Association (NLA) shows that 16 per cent of landlords believe they will be pushed into a higher tax bracket, as a result of the gradual phasing out of mortgage tax relief in the UK – a rise of seven per cent compared to Q4 2016.

Those landlords renting out a single property who were forced up a tax bracket would need to increase the rent by over 11 per cent in order to continue to make a steady yield from the property. This equates to as much as £116 per calendar month more for the average rental property.

The NLA has predicted that many landlords may end up selling their properties rather than continuing to let them, potentially affecting 368,000 homes, with young couples and families at the most significant risk.

Commenting on the figures, Richard Lambert, Chief Executive Officer at the NLA, said:

“Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years.

“A fifth (21 per cent) of landlords with just one property do not make a profit, and over the next few years those bumped up a tax bracket will find that their ability to continue to provide good quality housing will be seriously affected.

“More and more families and young couples are making their home in the private rented sector because they cannot either access social housing or afford to buy their own home. Affected landlords will have the choice of either increasing rents or selling up – so either way it’s the people they currently home who look likely to suffer the most as a result of this damaging tax change”.

Beavis Morgan – Specialist property advisers

At Beavis Morgan, we have extensive experience in advising individuals and businesses on all aspects of the property market. We act for a broad range of property investors and developers who actively need advice on how to best structure their property deals, both to ring-fence and protect their property assets, as well as to minimise the tax arising from their business operations.

For further information about how we can help you with your property ambitions, contact Steve Govey or your usual Beavis Morgan Partner.

Further reading: Landlords make their move to avoid tax increase and maintain profit