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Agency says buy to let still benefits from £16.7 billion tax relief

The UK’s army of buy to let landlords will still benefit from £16.7 billion worth of tax relief even after the government’s increasing taxes on the sector. 

That’s the result of research by London agency ludlowthompson, which says that tax reliefs still allow BTL landlords to offset against their rental income expenses such as mortgage interest and other financial costs; property repairs, maintenance and renewals; legal, management and professional fees; and rates, insurance and ground rents.

The Treasury says that it expects the amount of taxes it collects from landlords to increase by £840m a year by 2020-21 after its cuts in tax reliefs on interest payments and property maintenance.

Data provided by the government to ludlowthompson shows landlords claimed £17.5 billion in property expenses in the last year. Landlords claimed over £7 billion in tax relief on mortgage interest and other financial costs, while £3.7 billion was claimed for property repairs and maintenance.

After planned changes to tax relief are fully implemented, landlords will still be able to claim approximately £6.4 billion on interest rate costs alone.

“Buy to let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle” says Stephen Ludlow, chairman at ludlowthompson.

“Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

ludlowthompson says that ensuring landlords continue to invest in providing good quality accommodation should continue to be the main priority for policy-makers. This is especially important in areas like London where demand continues to outstrip supply.

Ludlow continues: “Labour mobility continues to be central to economic strength. However, if cities like London are to remain a magnet for home-grown and international talent, sustaining a vibrant, high quality rental market is essential. To do that, the system has to work well for both tenants and landlords.”

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