New research from Paragon Mortgages reveals that most Buy to Let (BTL) landlords want the Government to reverse changes made to the way BTL investments are taxed.
It may sound a little obvious, but the Paragon Mortgages PRS Trends report shows that landlords are aware of the changes in the way that BTL will be taxed. In the first quarter of 2017, 88% said that they fully understood the implications of tax relief changes, up from 71% six months prior.
The Paragon PRS Trend report surveyed 201 residential landlords, asking what single Government action would positively affect their business. The results found that:
- The most popular answer was reversing the changes to tax relief on BTL mortgage interest
- The second most popular suggestion was for a stop to Government interference in general
- Coming in third, was an exemption from Capital Gains Tax (CGT) and Stamp Duty for landlords moving their properties into a limited company structure
John Heron, The Managing Director of Paragon Mortgages, commented: “Having taken active steps in preparing for a difficult period of transition as the tax relief changes continue to be phased in, landlords are now facing up to the challenge ahead. Higher tax charges for landlords have combined with a general increase in uncertainty to drive confidence levels down. However, 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.”
The changes to tax relief were announced by former Chancellor George Osborne in the 2015 budget, and affect higher-rate taxpayers. Essentially the changes mean that:
- Some landlords will no longer be able to offset all the mortgage interest against rental income before calculating their tax return
- An additional rate of 3% will be charged in stamp duty
These changes will be phased in over the next three years.