Finance and Taxation Reform

Government challenged on MIR ‘evidence’

letting agent fees
Sally Walmsley
Written by Sally Walmsley

The government is being challenged over suggestions landlords are taxed more favourably than homeowners –  a claim cited as a reason for introducing the controversial mortgage interest relief changes coming in next month.

From this April, mortgage interest relief for landlords will begin to be restricted to the basic rate of income tax, with Treasury Minister, Jane Ellison MP arguing in Parliament that plans to restrict mortgage interest relief for landlords “will reduce the tax advantage landlords have over homeowners in the property market.”

This assertion was rejected last year by Paul Johnson, director of the respected Institute for Fiscal Studies, who said that the tax system “is not, and was not, even before the recent changes, more generous to people buying to let.”

Unlike homeowners, landlords pay income tax on their rental return, and pay Capital Gains Tax when they sell a property.

With a former member of the Bank of England’s Monetary Policy Committee warning that landlords will need to increase rents between 20 per cent and 30 per cent to cope with the extra costs of the tax changes, the RLA is warning that the policy risks considerable hardship for tenants based on false assumptions.

It is today writing to the Office for Budget Responsibility to provide clarification on the tax burden on landlords compared with home owners.

RLA Chairman, Alan Ward said: “We are now weeks away from a tax change that risks investment in new homes, and will cause considerable hardship for tenants.

“It is troubling that Ministers have not published any evidence to back up their assertions that landlords are taxed less heavily than homeowners. This is no way to make policy.

“We call on the Government to halt its planned tax changes which will do little to provide the new homes to rent they claim to want.”

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Magazine and Digital Editor for the NRLA. With 20 years’ experience writing for regional and national newspapers and magazines she is responsible for editing our members' magazine 'Property', producing our articles for our news site, the weekly and monthly bulletins and editorial content for our media partners.


  • A homeowner used to be taxed on the imputed rent value of their home which was why MIRAS was received, the former was rescinded although the later continued for years.

    A landlord with a mortgage is effectively “renting” the property from the lender and subletting it to their tenants. It should be obvious to anyone that a major difference between a landlord and a homeowner is that the landlord isn’t living in the property, there is no equivalence of status and to atempt to construct an artificial “equivalence” of tax treatment is moronic.

  • I am certainly no expert but I am not aware of any other investment (shares, bonds etc) where the purchaser can claim tax relief on the funding cost, so why on rental properties?

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