Tax changes lead landlords to exit buy-to-let
The new taxation seems to discourage landlords to stay in the buy-to-let sector. It is a fact that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes according to Residential Landlords Association (RLA).
This fall in supply finds its routes in the decision to restrict mortgage interest relief to the basic rate of income tax and add a 3% levy on stamp duty for the purchase of additional homes, according to RLA. “As more landlords see their profits eroded, and more legislation is in the pipeline, more landlords are likely to exit the market,” said Dorian Gonsales, Belvoir’s chief executive.
In addition, a new research shows that the country faces a net loss of 133,000 homes for private rent over the next year according to RLA research exchange, PEARL. On the other hand, there is an increase in demand for private rented homes, which shows that there is an immediate need for more housing options.
At the same time, the Government is launching a new scheme based on boosting the home supply by corporate developers. However, an analysis conducted by the RLA shows that the majority of landlords are either individuals or small businesses, with just a mere 2% being homes developed by corporate investors.
Private landlords have a crucial role in providing housing options and as the demand for private rental homes shows no signs of slowing up, they need to be encouraged and find support to provide the homes needed. RLA Policy director, David Smith stated: “The Government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent”.
Here at Discount Landlord, we provide a range of specialist insurance products to help you protect your investment.
Call 0800 294 4522 to buy or get a Quote!