Steve Bolton, founder of investment consultancy Platinum Property Partners and one of two landlords who have led a campaign against restricting mortgage interest tax relief for buy to let investors, has restated his opposition to the move.
“Today marks the introduction of tax changes that threaten to seriously damage the UK buy to let market. Landlords will no longer be able to offset all their finance costs against their rental income before calculating their tax bill. In implementing these changes, the government is breaking an age-old taxation practice and is forcing landlords to pay tax on part of their costs despite no other type of business having to follow such rules” he says.
“Landlords play an integral role in today’s property market. Rental demand is at an all-time high, and not just because many have been priced out of buying a home in their desired location. A growing number of people choose to rent because they enjoy the convenience and flexibility, and our increasingly mobile workforce requires it.” he continues.
Bolton claims the government’s recent Housing White Paper admitted the importance of a fair and affordable rental market: yet by targeting landlords’ profits, these changes will inadvertently make renting more expensive for tenants, he suggests.
“The changes will not only affect higher-rate taxpayers, but also an estimated 440,000 additional landlords that will be pushed into this tax bracket because of finance costs artificially inflating their income. Many will find their tax bill outweighs their profits, forcing them to sell properties, increase rents (which are often already below market rates) or leave the market altogether” he goes on.
“The tax changes are based on a fundamental flaw – that driving landlords out of the housing market will improve first-time buyer levels. This simply isn’t true. Landlords and first-time buyers do not buy the same types of properties, and shrinking rental supply won’t suddenly help first-time buyers to save for a deposit. In fact, it will do the very opposite as rents become more expensive. The sooner the government realises this and reverses the changes, the better.”