Agency claims many landlords don't know of buy to let tax changes

Almost 20 per cent of the landlords using an online letting agency are apparently unaware of the mortgage interest tax relief change introduced last week - and almost half don’t know how much tax they may or may not be paying by 2020.

The changes phased in from this month and over the next four years mean that landlords must now pay tax on turnover, rather than the difference between rental income and mortgage interest. Previously tax was due on profits at a landlord’s highest rate of income tax, but between April 2017 and 2020 this system will be replaced and all landlords will pay tax on the full amount less tax relief fixed at 20 per cent.

However, Upad claims 20 per cent of its landlord clients are unaware or “only vaguely aware” of the change; no fewer than 47 per cent have no idea what it means for their tax burden when the mortgage interest relief is phased out completely in 2020.

A fifth of its client landlords say they are most likely to increase rents to help mitigate the cost of their new tax bill. Only five per cent say this will push them into selling up. 

Upad claims landlords have been hit hard in the last year with the three per cent stamp duty surcharge and the expected ban on tenant fees in England in the near future.

A Upad spokesman says landlords should “look at ways to negotiate with their letting agent and be vigilant to agents trying to increase their commission or other fees.”