A London letting agency is playing down the impact of Chancellor George Osborne’s proposed changes to buy to let tax breaks, despite severe criticism of the measure from across the industry.
Currently, landlords can offset the interest on their mortgage repayments against the income they incur on the rent payments. From April 2017, this tax relief will be slowly restricted so that by 2020 it will be available at a current basic tax rate of only 20 per cent - even if the landlords are higher rate tax payers at 40 or 45 per cent.
However, Benham & Reeves Residential Lettings says the industry should not panic.
“While there have been some worrying headlines in the wake of these announcements, the consequences will not be as far reaching as many fear” claims Vidhur Mehra, finance director of Benham & Reeves Residential Lettings.
“For overseas landlords who have a long history of investing in London, their UK earnings are at the basic rate of income tax so the recent announcements will have little impact on them” says Mehra.
“Even for UK based investors, it means they will only have a slightly higher tax bill as they will still be able to claim 20 per cent rather than the existing 40 or 45 per cent.”
Mehra adds that as many BRRL clients are professional landlords “most will simply use the rent to service the mortgage and see their profit as the capital appreciation of the property.”
The firm says none of its landlords has indicated a wish to sell as a result of the measures.