Landlords could ‘seep out of the market’
Chancellor George Osborne announced in his July Budget that landlords will no longer be able to offset their mortgage payments against the higher rates of tax.
These changes will be introduced from April 2017 over a four year period, Osborne announced.
However, these changes could lead to a number of landlords leaving the sector, Valerie Bannister, lettings director at Your Move warned.
“With the rug of tax relief pulled from under their feet, many investors – particularly those recently set free by the pensions freedoms and intending to use buy-to-let as a retirement nest egg – will be feeling sorely blindsided,” she told Your Mortgage.
“If landlords seep out of the market as a result of these changes, overall demand for homes for sale will be diluted, and this may erode some of the healthy price growth we’ve been experiencing in the property market recently.
“It is possible that homeowners all across the country will feel these ripples if demand reduces. But the impact could trickle further down the economic chain than that – and could also impact on the pool of available homes to let, leaving thousands of tenants facing artificially inflating rents – and affecting another generation’s aspirations for homeownership.”
Osborne also changed rules regarding wear and tear. No longer will landlords be able to claim 10% as wear and tear each year. Instead, only itemised deductions will be allowed.
“The government has done a complete about-turn on some of their original policies, and changed the goalposts for landlords on other commitments such as wear and tear allowance for furnishings in their buy-to-let properties,” Bannister added.