Losing mortgage interest tax relief has prompted one in three landlords to think about selling up and one in four have raised rents.

New research from The Landlord Works for Nationwide reveals that 37% of landlords have considered selling rental properties as a result of the tax changes.

If found 77% feel the changes unfairly punish them, with the same percentage saying there should be more support for landlords especially post-pandemic.

More than a quarter (26%) of landlords with more than 20 properties have reduced their portfolios to reduce the tax impact, compared to 13% of those with between two and five properties. 

Less generous

Landlords could previously deduct mortgage interest costs from their rental income to help reduce their tax bills. However, this ended in 2020 and landlords now receive a tax credit, based on 20% of their mortgage interest payments, which is less generous for higher-rate taxpayers, who previously received 40% tax relief on mortgage payments.

The changes may also be forcing up costs for tenants, according to the research, with 25% of landlords having raised rents to cover the increased tax burden, jumping to 58% for those with 20 or more properties on their books.

Half of landlords are also struggling to keep up with the pace of regulation, while 38% find the new tax rules difficult and overly complex to understand.

Nationwide recently launched The Landlord Works, a free-to-use platform that helps landlords manage their properties in one place and navigates them through rules and regulations.

paul wooton landlords nationwide

The Landlord Works director, Paul Wootton, says: “In recent years there have been numerous changes for landlords to get their heads around. Now with the loss of the mortgage interest tax-relief many are questioning whether to leave the sector all together by selling some or even all of their properties in order to help reduce their tax burden.”

Read more about mortgage interest relief.

6 COMMENTS

  1. This must be the only business where you cannot set your full costs against your profits for tax purposes. We also pay higher taxes on purchases (SDLT) and disposal (CGT) than anyone else.

    The tax regime for LLs is unfair and is pushing LLs out of the PRS resulting in soaring rents & lack of housing.

    • A totally valid and well put argument Tricia highlighting how far the pendulum has already swung against LL’s.

      There is a great deal of noise suggesting that taxation should be aimed at those generating unearned income.

      If I remove any resentment that I feel for the term ‘unearned income’ in relation to rental property, it seems LL’s continue to be an easy target. It strikes me that those representing LL’s fail to sell the contribution that rental business contribute to the economy as well as it’s contribution towards housing the nation.

      Money generated through regulation and licensing, letting agents, finance, insurance, building and maintenance companies, all of whom generate taxation income for the exchequer and provide employment and business opportunities for others.

      Easy to attack with negative rhetoric, the value of the PRS is undersold and remains an easy target when touted as the eternal money tree.

  2. The subject of interest. Why can corporate land lords still claim and private cant. This is like racial decrimination. Oh basically thats what the goverment are doing.

    The tax office should not allowed to be doing.

    I started my portfolio in the early 90s..with the effects of covid, tenants rights i have earned this year not even minimum wage. That excludes interest coming out as well ie cant claim as expense. It is an expense legally they shouldn’t be allowed to do.

    I have tenants in brand new cars, flat screen in every room etc, whilst this goverment keep changing rules/regs; some cases back to how it used to be costing me a fortune.

    We get no help towards these changes, yet the local councils are crying out for rentals.

    Whats next goverment. Ive heard on the grapevine for private landlords only there’s going to be this external wall spray insulation. Cant do yourself because got to be qualified etc; average cost per property 10k.

    Look at the things they change and then return to the old.

    These metal consumer boxes. They are dangerous goverment with know brains. Metal conducts electric . You introduced in the past then banned.

    Oh the old boxes are dangerous because plastic is fire hazard. Use you brains goverment use a fire proof plastic.

    Epc ratings up to c, then it will be B then A.

    Want to ban section 21 for evictions why not just bring in rules where land lords can’t evict, because that’s the way your going

    Oh its legal to have list of bad landlords online but eligal to have a list of bad tenants.

    Alot of us land lords this is our pension. Goverment are also talking of bringing capital gains in line with earnings ????? Oh and thats private land lords only.

    I can bearly put food on the table, drive a car not worth £1000. I have 5 rented, three up for sale before they change capital gains tax.

    Oh poor goverment there’s a house rental shortage. You have only got yourselves to blame !!!!!!!

  3. Unfortunately not enough LL are selling up.

    There is still too much rental supply.

    We need thousands of homeless tenants.
    Not the feckless DSS wasters.
    Normal tenants who can’t find anywhere.

    Ask any mortgaged sole trader LL as to whether they would have invested as a sole trade had S24 existed.

    Very few would have said yes
    Most LL would have invested as corporate LL.
    LL would NOT have objected if S24 had bern introduced for all new investments.

    It was the retrospective nature of S24 that was so evil.

    Dopey Osborne knew he had leveraged sole trader LL by the proverbials!

    He was looking to forcing those LL to sell and have the massive CGT returns.

    LL can never again trust any Govt.

    It won’t be long before small corporate LL are attacked with penal taxes.

    Labour have laid down the blueprint; wealth taxation
    Expect the Tories to nick the idea!

    Only mortgage free LL can hope to survive.

    The PRS should return to rich people.
    Govt clearly detests LL who use leverage.

    Trouble is leveraged LL are 50% of the PRS.

    If that 50% sells up who will house those tenants!?

    Leveraged LL would do well to just sell up.

  4. We will have to just continue raising rents. All our tenants have had upto £120 increases this year.

    With the addition of taxes and EPC legislation we have also told tenants annually they will see further rises. Also if they wish to leave were happy for them to leave we’ve advised.

    We want to be compassionate but the government want us to create inflationary costs due to the tax rises and the discrimatory legislation.

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