STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

MPL
Watch out for increased letting agent fees, warns online operator

Online lettings agency Upad claims 20 per cent of landlords are set to increase their rents to their tenants thanks to changes to the mortgage interest tax relief - and it’s warning landlords that mainstream letting agents may hike their fees, too. 

The changes which started being phased in on April 6, mean that landlords must now pay tax on turnover rather than - as before - on the difference between rental income and mortgage interest. 

Until April, landlords could deduct the full cost of their mortgage interest payments, or any other property finance, on their rental properties before they paid tax. Now mortgage, loan and overdraft interest costs can no longer be considered in calculating taxable rental income; the full changes will be phased in gradually over the next four years and by 2020, 100 per cent of buy to let finance costs will be restricted to the basic tax rate of only 20 per cent.

“Our latest research shows already how out of pocket landlords are set to be by 2018/19 alone, as they see a big rise in their tax bills and a substantial hit to their profits. Those who are in the higher rate tax bracket of 40 per cent will be the worst affected but others could find themselves being tipped into the higher tax bracket despite their income not having increased, which will leave many renting at a loss and subsidising their property every month” according to James Davis, founder of Upad.co.uk. 

The research by the UK's largest online letting agent also revealed that 20 per cent of landlords will increase rents to help mitigate the cost of their new tax bill, meaning tenants could face a permanent increase in rent as a direct result of the changes.

Davis adds: “Landlords should also look at ways to negotiate with their letting agent and be vigilant to agents trying to increase their commission or other fees, as they look to flesh out their profits following the ban on tenancy fees.”

icon

Please login to comment

imgcollapse
sign up