No Budget Concessions for Landlords:
What little hope landlords had of the Chancellor reversing some of the recently introduced rental property tax measures were dashed in Wednesday’s budget.
Mr Hammond’s has failed to take the opportunity to reverse George Osborne’s punitive tax regime aimed at buy-to-let landlords, and he further compounded the issue by striking out at the land lording class, many of whom are likely to be self-employed or company directors and savers, with his NIC increase and reduced dividend tax allowances.
All this despite spirited lobbying from the property industry, including the landlord associations, letting agents and housebuilders. Despite calls from all quarters in the industry to reverse the additional 3% stamp duty surcharge on second homes, which includes all buy-to-let properties, or to reinstate mortgage interest tax relief for investors, there was not even a mention of these in the Budget.
Many in the industry feel that these tax policies will not only deter more investment in properties to rent, by typically small-scale investors, but that it will result in many leaving the industry, both reducing supply and therefore increasing rents.
It seems the government is pinning its hopes on big institutional investors entering a growing rental sector to take up the slack, but so far this has been slow to get going. In the meantime not only are landlords suffering as a result, so are their tenants, many of whom are paying up to half their salaries in rent in some inner city locations.
From next month, landlords will start to lose the right to deduct their mortgage interest costs from income at the rate they pay income tax – currently up to 45%. Instead, they will see this fall over the next three years and will be replaced with a 20% tax credit.
One bit of relief for many, the Chancellor said he is providing an extra year, until April 2019, before the “Making Tax Digital” regime becomes compulsory for unincorporated businesses and landlords with turnovers below the VAT threshold. This will provide them with more time to prepare for having to keep digital records and provide quarterly updates to HMRC.
Businesses, self-employed people and landlords with turnovers under £10,000 will be exempt from these new rules. Other businesses, self-employed people and landlords will be required to start using the new digital service, quarterly reporting using specific software, from April 2018.
See our Budget Review here
Budget disappointment for buy-to-let landlords https://t.co/4uSO6bNbLa
— LandlordZONE (@LandlordZONE) March 10, 2017