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How will tax changes affect the rental market in 2017?





What will buy to let tax changes mean for landlords and renters?

This year, the rental market in the UK is set to undergo yet another change, when in April, the government introduces its new rules on income tax relief, but how will it affect those buying in the UK, and do new statistics show a worrying lack of knowledge within the sector?

The new changes set to affect investors in the rental market will largely centre around income tax. Essentially, those who own rental properties will no longer be able to deduct mortgage interest from their taxable income before submitting returns.

It’s a move which may make it more expensive for those who own rental homes, with experts speculating that this could cause a negative effect in the sector, with a greater number of landlords raising rents to compensate.

Read advice on the buy to let tax changes from 10 industry experts. Read more… 

Buy t-o let tax changes

But how badly will buy to let landlords be affected?

According to a newly published property investor survey from Mortgages for Business, around a third believe they will be affected under the new rules.

Some 60 per cent believe that income tax rule changes will punish them and affect their income, while 29 per cent said that they do not believe they will suffer.

One of the big questions, however, at the moment, is just how much do investors actually know about these changes? And is there still a problem in the sector with regards to knowledge about such new rules?

The Council of Mortgage Lenders (CML) recently published a study that suggests this is not the case. Despite the fact that the majority of people will have to at the very least seek advice and look at their own portfolios as the changes come into play, there is still a lack of knowledge as we near the new deadline.

It said that only half of those surveyed who own rental homes have a clear understanding of the impact of the new regulations.

This is something that has long been a problem in the sector, with similar issues around people knowing what Stamp Duty surcharges meant when they were introduced in 2016.

So, what can be seen to be clear is that while around two-thirds are expecting to see some impact from the changes the government is set to bring in, many expect it to be minimal, and in reality, more needs to be done to educate landlords, buyers and investors about how changes will affect them and their income in the months and years to come.