New landlord tax to increase housing prices


London – by Chiara Fiorillo

A new landlord tax has come into effect this month. Landlords will now be able to claim relief on up to 20% of their interest payments, compared to up to 45% they could claim before. Some people predict that the landlords will now pass these costs on to their tenants.

According to research conducted by Vital Research and Statistics and commissioned by Experience Invest, the majority of Brits (85%) are unaware of the tax changes. Just under half of the respondents (45%) say they would invest in property over ISAs and stocks, while over half (51%) claim UK housing is unaffordable.

However, with these changes to taxation laws, prices are only predicted to rise. Experts suggest that high-rate tax payers will be most affected by this tax change.

Despite this, the vast majority of prospective investors (93%) still aspire to put their money into property within the UK rather than looking to invest abroad.

Ray Boulger, mortgage market guru, gives tips for maximum profit for prospective and current landlords: “Now is a good time for landlords to seek specialist advice as there is not a one-size-fits-all solution.”

“The new way to calculate income may push lower rate tax payers into the 40% tax bracket. There will be a substantial effect on landlords who receive child benefits – especially those who have more than one child – and for those who will find themselves in the 45% tax bracket.”

“For new purchases setting up as a limited company is one option, as properties held in a limited company structure still qualify for tax deductible mortgage interest rates.”

“However, the impact of Capital Gains Tax and Stamp Duty Land Tax will often mean it is not worth switching properties already owned to a limited company structure”

If Brits become more informed on these matters, this will ensure a less drastic change in housing prices.