Housing minister claims buy to let tax changes will only affect 20% of landlords
Housing minister Gavin Barwell says recent changes to buy to let mortgage interest relief and stamp duty will only affect a small proportion of landlords.
According to an ARLA report from a meeting of the All Party Parliamentary Group for the Private Rented Sector earlier this month – attended by Barwell – the minister quoted HMRC figures, claiming just one in five landlords would be affected by the mortgage interest changes coming into effect from April.
After his opening remarks the Minister then took questions from MPs.
James Gray, MP for North Wiltshire, raised concerns on behalf of his consituents regarding the tax changes. He said the new system – which will see mortgage interest tax relief restricted to the basic rate of income tax – could mean many landlords will no longer make any money at all from their property and may be forced to leave the rental sector.
Barwell agreed that the implications of the new system need to be considered, before quoting the HMRC figures.
The session also touched on the proposed ban on letting agent fees charged to tenants.
Helen Hayes, MP for Dulwich and West Norwood, welcomed the prospect of a ban, saying that the cost of fees was one of three key issues facing the private rented sector in her constituency.
The Housing Minister agreed with the issue about cost and noted the main reason for costs going up was a lack of supply of home to rent and rents going up by more than wages.
Barwell also said that the consultation into the fee ban – which will begin in the spring, it was announced last week – is to ‘inform the detail of the policy and how it would work’.
In Scotland, lettings agency fees to tenants have already been banned.
In England and Wales lettings and managing agents have been legally obliged to clearly publicise their fees since last year. So as a landlord in England, Wales or Northern Ireland you will know all about the fees your tenants have to pay when they sign a rental contract with a letting agent.
This means that tenants can be charged anything to check-in or check-out when moving, which is why Scotland were the first to abolish these fees and now the government is following suit.
The question now is whether letting agents will seek to pass costs onto landlords, which coupled with various tax changes, including the scrapping of mortgage interest relief from April 2017, would make it even harder for buy-to-let investors to make a profit.
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