Over 60 per cent of private sector landlords face being pushed from the basic to higher rates of income tax as a result of government reforms.
That's the latest claim of the Residential Landlords' Association in response to Chancellor George Osborne's proposal that from 2020 mortgage interest relief for residential landlords will be restricted to the basic rate of income tax.
The RLA says that while landlords paying the basic rate might feel unaffected by the change - because tax will instead be applied to turnover, rather than profit - many are likely to find themselves pushed into the higher rates of income tax, despite their income not having increased.
The RLA has surveyed almost 1,200 landlords in making the assessment, and association representatives met with officials at the Treasury to raise concerns about the impact the reforms will have on the landlords' investment proposals.
“Having felt that they were not affected by the Budget measures many [landlords paying basic tax] will seriously consider whether it is worth continuing in the market when faced with this tax bombshell" predicts RLA policy director, David Smith.
“With almost 90 per cent of landlords being individuals renting out just a handful of properties each, it is only by supporting this group that we will boost the supply of homes to rent. The Budget announcements risk undermining the potential for growth.
“Even at this late stage we are calling on the government to pause and provide more time to assess the impact on market.”
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