Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

Steve Bolton, Founder and Chairman of Platinum Property Partners (PPP) comments on the changes to mortgage interest relief for landlords announced in the Summer Budget:

“For decades, the private rented sector has been providing much-needed homes to meet a growing demand for flexible accommodation. A healthy supply of rental properties keeps rents down, and tax relief on mortgage interest payments is a key way for the Government to incentivise investment.

“The scaling back of tax relief on mortgage interest payments could have a significant impact on the bottom line for many landlords who pay above the basic rate of income tax. This is especially true for those investing in single occupancy buy-to-lets with large mortgages and little opportunity to recoup this extra expenditure by increasing the rents they charge.

“Mortgage interest payments can be up to 50% of landlords’ total annual costs. Those who currently receive 40% relief on their interest payments will now see this tax benefit halved, leaving profits after tax reduced. This change in tax law could therefore deter investment in the private rented sector and restrict supply at a time when demand for quality rented accommodation is high.

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“From a tenant’s point of view, such a move may force some landlords to increase their rents to ensure that they remain in the black and not in the red. Landlords hit hard by this change may also be driven to reduce general property improvements or maintenance which could worsen the standard of rented accommodation.

“However, depending on their business model some landlords will be able to cope with the changes better than others. The PPP model of letting high quality shared houses to young professionals and key workers means our Partners’ portfolios can withstand the changes to tax relief because the model is based on a high level of rental income that is up to three times higher than a standard buy-to-let.

“The changes will be phased in gradually (over four years from April 2017), giving landlords plenty of time to plan ahead and assess how they can absorb these higher mortgage interest bills. For those landlords who don’t have a robust business plan, this could be the ideal time to get advice and education about the best way to structure their business.”

Platinum Property Partners –

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.


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