News: Autumn Budget delivers 'another tax hit for landlords'

Tue, 30 Oct 18

The Philip Hammond has once again failed to reverse the previous chancellor George Osborne’s deeply unpopular tax reforms that have had far-reaching implications for the buy-to-let sector.

The government’s decision to phase out mortgage interest tax relief and introduce a 3% stamp duty surcharge for additional properties is having a detrimental impact on households up and down and the country, and yet the Chancellor opted to ignore the issue, despite the fact that there is plenty of evidence to suggest that the tax clampdown on landlords is resulting in rent increases for tenants across the UK.

Russell Gould, CEO, Vesta Property said, “We are disappointed that once again property has taken a back seat and the much needed tax breaks to support landlords who provide the nation’s tenants with valuable rental homes have been ignored.”

James Davis, founder and CEO of online lettings agency, Upad and himself a portfolio landlord, feels that the government should treat landlords with “more respect” and recognise that for many, working within the PRS is a business choice which should, therefore, command the same respect as more mainstream business areas. 

“I honestly believe we [landlords] are needed and that, therefore, our future is safe,” he said.

The only lettings relief that Hammond offered in his Budget statement was to those landlords who are in shared occupancy with their tenant.

Limiting lettings relief to properties where the owner is in shared occupancy with the tenant is “as good as removing it in its entirety”, according to Robert Nichols, chief executive of Portico letting agents.

He said: “Once again, private buy-to-let landlords have to get their heads around another tax change that will leave them worse off in the long run.

“The new restrictions on lettings relief are a further punishment to hard working individuals who have chosen to invest sensibly in residential property.”

Robert Pullen, partner at Blick Rothenberg firmly believes that limiting lettings relief to properties where the owner is in shared occupancy provides “another tax hit for landlords”.

He commented: “The £40k relief on sale will be all scrapped, except for rent-a-room properties.”

Neil Cobbold, chief operating officer of PayProp UK, is rather surprised that the government did not announce a more stringent clampdown on short-term lets.

Although this sector provides a great boost to the economy, Cobbold was keen to point out that it also affects the fortunes of the lettings sector, and that is why he feels it is the “right time for initial regulation”.

He said: “There has to be an equal tax footing for conventional landlords and those looking to let their homes on a short-term basis, and the proposal for limited tax relief on properties where the owner is in shared occupancy with the tenant marks the very first step towards achieving that.

“Over the next decade, it is likely that the short-term lets market will continue to expand, so it will be interesting to see if the government takes a similar regulatory approach as it has done with standard lets in the private rented sector.”

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