A Liverpool City Region landlord is calling for the government to reconsider the forthcoming tax changes for buy-to-let landlords in March’s Spring Budget.
From April 2017, the government will introduce plans to reduce mortgage interest tax relief from 45 per cent to 20 per cent. Under the new rules, landlords will still be able to deduct repairs and legitimate expenses from their taxable income, but will only be able to offset a portion of their mortgage interest costs against tax.
This follows the introduction of a 3 per cent surcharge on stamp duty in April 2016, for those purchasing a second home or buy-to-let property.
Paul Nicholson, managing director of Luxor Group, believes the government should delay the forthcoming tax changes, in light of new figures which show higher than forecast stamp duty revenue.
The government predicted that the stamp duty surcharge would raise an additional £630 million in the first year. However, new figures from HM Revenue & Customs (HMRC) show that in the first nine months alone, the stamp duty surcharge has generated £1.19 billion, £560m more than the government predicted.
He says: “The Spring Budget provides an opportunity to support a thriving rental market which is not only good for landlords and tenants, but benefits the wider economy alike.
“I would like to see the government get behind the landlord population and support the individuals who supply much needed housing stock to the country. Landlords are an integral part of the solution to the housing crisis, not the problem. This means reviewing the planned changes to mortgage interest relief, which is likely to discourage landlords from investing in the property market.
“The stamp duty windfall gives the government an opportunity to reassess the further tax changes, undertake a greater assessment of the policy and back the rental market as it supports the development of new homes.
“Prioritising the private rented sector alongside owner occupation was a great step forward in the housing white paper, but these punitive measures contradict the government’s ambition to introduce more homes built for rent and could dampen investment in buy-to-let overall.”