Tax Cuts For Buy To Let Landlords
Chancellor George Osborne’s decision to scrap higher rate tax relief on buy-to-let mortgage interest repayments could cost some minor landlords thousands of pounds a year.
This may deter new investors and even force existing landlords to sell up and look elsewhere for a decent return on their money.
Since the first buy-to-let mortgage was launched in 1996, investing in bricks and mortar has beatern almost every other investment, as buyers have benefited from a combination of rental income and capital growth from rising property prices.
They also bagged income tax relief of up to 45 per cent on their mortgage interest payments, relief unavailable to residential homeowners.
Critics claim this gave them an unfair advantage over first-time buyers, effectively driving them out of the market and there has been a growing trend of first-time buyers being gazumped by buy-to-let landlords in much stronger financial positions.
The Chancellor has also scrapped the automatic right for landlords to claim 10 per cent of the rent on furnished properties against wear-and-tear costs.
From April 2016, they will only be able to deduct costs they actually incur and must supply receipts.
This Budget move will hit ordinary workers who had saved hard and invested in property to boost their income.
Despite the changes, buy-to-let still remains quite an attractive part of investment.
“Bricks and mortar will still be seen as one of the safest and most profitable investments but let’s hope rents don't go up to cover the loss of tax relief” says Greengates Builders Merchants Accrington, Lancashire.