UK property landlords call for govt to overturn tax changes

UK property landlords call for govt to overturn tax changes [Photo: designer491 via iStock]

The majority of buy-to-let owners in the UK property market are knowledgeable about changes to taxation imposed by the government on the rental sector over the last year, but most want to see the extra charges reversed by ministers. 

Last year, the government brought in a new fee that made it more expensive for landlords to buy property in the UK market, when they added a three per cent levy on top of Stamp Duty for any home bought for the purposes of letting. On top of that, Westminster then brought in new rules this April that sees those who invest in property unable to deduct mortgage interest from their taxable income. 

And now, a new report published by Paragon Mortgages has found that nine out of every ten landlords in the UK property market are fully aware of the implications of these changes, and what it means for their own investments. However, in spite of this, they still want to see the government reverse the charges and make it more affordable for them to operate in the market. 

The fear is that as new tax laws come into force for landlords, the extra costs of buying and owning rental properties will be passed down to tenants, who are forced to pay more in a market where affordability is already being stretched. 

"Higher tax charges for landlords have combined with a general increase in uncertainty to drive confidence levels down," said John Heron, managing director of Paragon Mortgages. 

But, he did say there are positives, however, in the market in spite of these problems. "Whilst there are signs of lower demand it would appear that property yields are being maintained and that void periods are close to historic lows," he said. 

As well as looking for the government to overturn tax changes, the landlords surveyed by Paragon also said they would like to see an exemption from capital gains tax and stamp duty for landlords who register themselves as limited companies; a practice that many are now starting to favour.