The Government’s impact assessment of budget measures to restrict
mortgage interest relief to the basic rate for landlords is being questioned by
the Residential Landlords Association and the Scottish Association of
Landlords.
The measures
announced in today’s budget create damaging uncertainty for the private rented
sector and will leave tenants facing increased rents, claim the landlords’
representatives.
HM Revenue
and Customs’ impact assessment refers to the proportion of individual landlords
that will receive less relief as a result of this measure. This misses the
point that it is not the landlords but the number of properties affected that
matters most. According to HMRC 20 per cent of landlords will be affected but
many of these, if not most, will have more than one property with an interest
charge against each.
The RLA and
SAL are pointing to an assessment by PWC which has warned that the measure:
“could see buy-to-let investors feeling the squeeze and putting up rents”,
which, it notes, “would have a major impact” on tenants.
Commenting
following the Chancellor’s statement, RLA Chairman, Alan Ward said:
“The RLA
will look in detail at the Government’s measures, but on the face of it the
impact could be to push up rents as landlords have to recover their extra
costs.
“With many
contradicting assessments of the number of private rented properties and the
number of landlords, HMRC’s impact assessment is scant on detail. The reality is
that this measure will hit many more tenants than landlords.
“We urge the
Government to hit the pause button on these proposals and undertake a
comprehensive and open consultation and assessment of what its measures will
mean.”
Further Information
- HM Revenue and Customs’ impact assessment can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443277/6041_Restricting_finance_cost_relief_for_individual_landlords__3_.pdf .
- Robert Walker, PwC real estate partner has said of the measure:
“Today’s
changes do nothing to address the fundamental lack of supply in the UK housing
market and ultimately may backfire and hit people who are having to rent.
“We could
see buy-to-let investors feeling the squeeze and putting up rents. This would
have a major impact on Generation Rent.
“Moreover,
if interest rates increase over the coming years, and rental yields don’t keep
pace, investors could be paying tax on a loss.”
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