A leading housing expert has warned of families losing their homes as a result of extra tax burdens on landlords.
Dame Kate Barker, a former member of the Bank of England’s Monetary Policy Committee issued the warning to the Treasury Select Committee yesterday.
Pressed about the impact of recent tax changes affecting landlords, she warned that because changes to mortgage interest relief will affect existing housing stock, there was a danger that families who have been living in a house for some time and have been paying their rent could find themselves being forced to move “because the buy-to-let landlord no longer finds the yield acceptable or can’t afford it.”
From 2017 mortgage interest relief for rented housing will begin to be restricted to the basic rate of income tax only and landlords will be taxed on their income and not their profit.
Dame Kate authored an independent review of UK Housing Supply for the Government and her comments come just weeks after the Redfern Review into declining home ownership warned that “hostility to landlords” and “increasing uncertainty about their tax treatment” could reduce investment in the private rented sector.
The Residential Landlords Association is calling for protection for tenants already in rented housing by applying the mortgage interest relief changes only to new borrowing rather than to existing holdings.
Alan Ward, RLA Chairman said: “Dame Kate’s warning is a sober reminder of the potential social consequences of forthcoming changes to mortgage interest relief.
“These changes pose real risks for tenants where their landlord is simply unable to afford the extra costs being imposed on them and has no option other than to sell a property.
“Even at this late stage we would call on the Government to apply the changes only to new borrowing.”