Landlords Are Facing A 'Watershed' With Tax Bills
Landlords are facing a 'watershed' this month because of tax changes being reflected in their tax bills for the first time, one trade association warns.
The Intermediary Mortgage Lenders' Association (IMLA) says that since 2015 the various regulatory and tax changes have also affected tenant choice and the availability of homes to rent.
The body says that government policies have led to higher rents, which will make it more difficult for tenants to save up to buy their own property.
In recent years, the regulatory changes facing landlords include the additional 3% stamp duty surcharge and the reduction to mortgage interest tax relief.
Also, buy to let landlords face affordability tests under the tightening of underwriting rules by the Prudential Regulation Authority.
First opportunity for many landlords to see the effects
However, IMLA says that this month's tax returns are the first opportunity for many landlords to see the effect that these policies have had on their investment earnings.
The executive director of IMLA, Kate Davis, said: "The measures continue to erode the BTL sector and we may be approaching a watershed with landlords starting to feel the effects of changes to income tax being shown in their tax bills this month for the first time."
She says that the recent phase of subdued rent price increases may also be hiding the effect the changes are having on the rental sector.
In a published report by IMLA, they say that early last year saw a continued erosion in the BTL sector with investment in UK's rental property market collapsed by 80% over two years.
Ms Davies added: "It's no coincidence that 2017 brought an end to 16 years of growth in private rental dwelling stock.
ďIt is vital that no extra measures are introduced to risk eroding the private rental sector further or affecting the wellbeing of those who are relying on it."
Letting agents set to lose £60,000
Meanwhile, it's been revealed that the Tenant Fee ban will see the average letting agency losing £60,000 after the bill was passed by the government.
According to research from Dlighted, a deposit free renting firm, the average letting agency will lose more than £60,000 over the next two years because of the ban.
The new law will come into effect from 1 June 2019 and tenants who are charged £337 on average in fees will now no longer have to pay for things like cleaning services, credit checks, referencing, inventories and administration charges.
The managing director of Dlighted, Ajay Jagota, said: "The figures are stark and the implications huge with the average agency going to lose £60,000 and for many will mean the difference between remaining open or closing for good."