U.K. Cuts Back On Landlord Tax Relief Program To Help Slow Down Housing Market

A radical change is ahead for UK landlords.  Tax reliefs favouring UK landlords have led to a steep increase in investment in buy-to-let properties in the UK, and …

A radical change is ahead for UK landlords.  Tax reliefs favouring UK landlords have led to a steep increase in investment in buy-to-let properties in the UK, and have contributed to inflating property prices and rents, making housing increasingly unaffordable.

Landlords are currently able to claim tax reliefs worth 40% or 45% of interest payments on buy-to-let mortgages. However under new rules, from April 2017, they will be able to claim maximum tax relief of only 20% of the interest payment. The change will be unfolded over the next four years. 

The landlords will also not be able to claim 10% of the rent against wear-and-tear costs. From April 2016, landlords will only be able to deduct costs they actually incur.

Britain’s two million buy-to-let landlords will be affected by these tax regulations. 

Claim up to $26,000 per W2 Employee

  • Billions of dollars in funding available
  • Funds are available to U.S. Businesses NOW
  • This is not a loan. These tax credits do not need to be repaid
The ERC Program is currently open, but has been amended in the past. We recommend you claim yours before anything changes.

"Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot," Chancellor George Osborne said recently.

Osborne added that how popular buy-to-let mortgages have become in Britain can be gauged from the fact that they now accounted for more than 15% of new mortgages, causing the Bank of England to sound warnings about the market.

“So we will act. But we will act in a proportionate and gradual way, because I know that many hardworking people who’ve saved and invested in property depend on the rental income they get,” he said.

The government also announced a major tax relief to home owners who let a room in their own home to a lodger. Homeowners will be able to make tax-free income in rent up to £7,500 (US$11,548) from lodgers. Earlier, the tax-free limit was £4,250 (US$6,544). The change comes into effect from April next year.

Advocates of affordable housing welcomed the announcement. They said that buy-to-let landlords were being given unfair advantage over regular home buyers. They hoped that the government would take more such measures to give home-buyers a level playing field.

This article was republished with permission from Global Property Guide.

advertisement

Does Your Small Business Qualify?

Claim Up to $26K Per Employee

Don't Wait. Program Expires Soon.

Click Here

Share This:

In this article