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Hope for buy-to-let landlords over tax reforms
A glimmer of hope may have been handed to landlords following Chancellor George Osborne’s Budget plans to cut mortgage interest relief.
It was announced in the Summer Budget that landlords’ mortgage interest relief would be limited to the basic rate of tax. The scheme is due to be phased in between April 2017 and April 2020.
The Residential Landlords Association (RLA) said the move would typically mean a landlord with a £150,000 buy-to-let mortgage on a property worth £200,000 could see their profit fall from around £2,160 to just £960 a year.
This has led to fears that in a bid to save money, many landlords could be forced to stop using letting agents.
David Smith, the RLA’s policy director, yesterday told Property Industry Eye that following a meeting with Treasury officials, it was made clear that the government would not be performing a U-turn on the Budget announcement.
However, he said the RLA had been asked to propose other ‘tax solutions’ to the Treasury.
Smith said: “The general feeling we are getting is that a U-turn is very unlikely, but that doesn’t mean we cannot push for it and we will do that.
“There is light at the end of a tunnel but it may not be the same tunnel. I do not think he is going to draw back (on the current plans) but I think there is the chance that a new relief could be produced which could be good for the industry as a whole.”
The RLA is now asking landlords and letting agents to put forward their own proposals for a new tax relief system.
It said: “If you have alternative ideas on tax relief, then we would be happy to hear them, particularly if you can provide reasons other than just ‘it will save the landlord money’.
“For instance, allowing energy efficiency improvements to be written off against income as opposed to capital improvement will encourage landlords to invest in energy efficient measures.”
Smith also denied that a petition calling for a reversal of Osborne’s plans was failing. The site ‘Say No to George’ had attracted more than 10,000 signatures a week ago but since then has only attracted a further 4,000.
He said: “10,000 was our first target and the next target is 100,000. I do not think that is a bad number but people do have other things to do in August. We will continue to support it and are sure it will pick up into September.”
The RLA is to take any proposals it receives back to the Treasury next month.
Landlords and letting agents have been encouraged to email their tax relief ideas to campaigns@rla.org.uk.
The RLA also has a dedicated tax campaign webpage where agents and landlords can write to their MP. It can be found here
http://www.propertyindustryeye.com/hope-for-letting-agents-over-mortgage-interest-relief/
