As a landlord, you will have likely been affected by the rising mortgage rates across the country in recent years - But there might be hope ahead as Conservative MP, Andrew Lewer, has spoken up for landlords urging a new tax reform.
It’s common knowledge that mortgage prices have steadily risen over the past year. Increasing costs have led to increasing numbers of landlords who may have struggled to justify holding on to their investments.
The reduction in new landlords, and the inflection of landlords deciding to sell-up is having significant effects on the UK property market. With rising numbers of people seeking to rent in the UK, the lack of new offerings from landlords is causing a serious supply and demand crisis and as a result, rents have increased.
This rental crisis is causing challenges for renters from lower economic backgrounds. With reduced suitable affordable accommodation on the market, many renters will be forced into low quality, unsuitable rentals.
Why do we need tax reform?
Changes to property tax have had a significant impact on landlords in recent years. Since the introduction of Section 24 tax ruling in 2015, landlords were no longer able to deduct their mortgage interest payments from their rental income when calculating their tax bill. Additionally, you will be familiar with the additional 3% stamp duty surcharge for second residential properties and investments. These policies have been putting an increasing pressure on landlords in the UK who are already struggling to justify the cost of their investments.
In a bid to help landlords, Lewer, made the case in the House of Commons Magazine, stating “Restrictions on mortgage interest relief and the imposition of a stamp duty levy on the purchase of homes to rent out have indeed made life more costly for landlords.”
“Marry this to the uncertainty surrounding the government’s plans for the sector, whether in energy efficiency requirements or the ending of Section 21 repossessions, and you do not exactly have an attractive market.”
Lewer wants to see a reform which gets rid of the 3% stamp duty surcharge for additional homes which he believes will increase the number of new privately rented homes being made available across the next decade by increasing the profitability of buy-to-let investments.
Additionally, he suggested an unfreezing of Local Housing Allowance and better security for future rental regulations to encourage more long term investment.
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