A new study of landlords reveals that far more believe they will be affected by today’s buy to let mortgage interest tax relief changes than government estimates - and almost half plan to quit the rental market by 2020, fearing they are being unfairly targeted.
Research by insurance firm AXA shows that more than 40 per cent of landlords believe they will be worse off as a result of the changes. This is despite the government’s assurances that 82 per cent will not have any additional tax to pay.
AXA found evidence that this change coming on top of a raft of legislation aimed at landlords in recent years means that almost half of private landlords will withdraw from the market by 2020.
Twenty one per cent said they plan to sell all their rental properties, 10 per cent will reduce their portfolio, and seven per cent will switch to commercial property ownership, which is perceived as a safer option.
A further eight per cent say they will transfer ownership of their rental property to their spouse or other family member who is in a lower tax bracket as a way of avoiding extra tax.
Two thirds of landlords surveyed said they feel stigmatised for running a rental business, and just over half directly quoted government policy as a source of this stigma.
The results suggest that just four per cent of private landlords have a portfolio big enough to be able to give up work and live off the proceeds. The average UK landlord makes £343 rental profit each month after expenses, with juge regional variations ranging from £297 in the West Midlands to £713 in London.
“Landlords have been subject to one piece of new legislation after another in recent years, much of it very complex indeed”, says Gordon Rutherford of AXA Insurance.
“We see a real confusion as to what the new tax changes will mean, with government and landlords giving very different estimates of the impact. We need to remember that few landlords are professional property tycoons: two thirds in the UK are ‘accidental’ landlords.
“They tend to own just one rental property that they’ve inherited or are finding hard to sell, and they make a modest income once time and expenses are out. They do feel increasingly apprehensive, as we can see from the numbers thinking of withdrawing their properties from the rental market in the coming years.”