With the next budget fast approaching, the whole property industry are urging the new Chancellor, Phillip Hammond, to reverse the Landlord Tax changes introduced by his predecessor.
George Osbourne’s Tax changes were due to be slowly phased in by April 2017 but have been met with wide criticism from all property professionals.
In simple terms, the changes will impact all higher rate tax paying landlords and will reduce their tax relief to the basic rate of tax which is 20%. For portfolio Landlords this will have a huge impact.
The Nationwide Building Society published estimated figures of how a typical landlord’s profits might be hit. Someone with a £150,000 buy-to-let mortgage on a property worth £200,000, with a monthly rent of £800, would currently have a net profit of around £2,160 a year. Under the new system, the net profit would plunge to £960.
The changes have also had a detrimental impact on the property market with reports of Landlord borrowing down 21 percent. These measures were introduced to try and help the first-time buyers’ market but figures show that they have had little impact with first-time buyers’ borrowing down 19 per cent month-on-month and four per cent down year-on-year.
A further change is that Buy-to-Let properties and second homes would be subject to stamp duty at 3% regardless of value.
Landlords feel like they are being targeted and vilified and are pushing for these changes to be scrapped in the upcoming budget.
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