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MP told tax changes will devastate communities

Sally Walmsley
Written by Sally Walmsley

New tax changes will force landlords to quit the market and send rents rocketing, an MP has been warned.

Changes to mortgage interest relief, which will see landlords taxed on turnover rather than profit, will be phased in from next month (April) forcing some landlords to sell up and pushing rents up rents for tenants by up to 30%.

MP Dame Rosie Winterton visited Doncaster estate and letting agent Galley Properties, where director Teresa Galley and RLA vice chair Chris Town outlined the problems facing the private rented sector and what the government should do to help.

Ms Galley invited Dame Rosie to the business to talk about the changes she is already seeing on the ground as a result of the tax grab – and her fears for the future of the private rented sector.

She said many landlords are already selling up, with overseas investors snapping up the properties.  According to Ms Galley these new landlords are reluctant to improve these homes, lowering standards across the board. Some homes are removed from the rental market altogether – affecting supply.

She said: “As an estate agent we are seeing numerous landlords wanting to sell up. These are landlords with decades of experience with many tenancies lasting years and some with large portfolios. These are the very professionals that the country should be encouraging to expand but instead they are being punitively taxed and worrying about bankruptcy.

“The homes they are selling are often being bought up by foreign investors.

“The loss of a large proportion of good local landlords that take pride in and invest in their local communities can only lead to further social decay in more and more of Doncaster’s suburbs.”

The RLA has been campaigning against the tax changes since they were announced by former chancellor George Osbourne, with hundreds of members meeting with their MPs to discuss the devastating impact of the plans at a time of housing crisis.

Dame Rosie Doncaster Central MP, said: “The meeting was extremely useful as we had a very interesting discussion on a number of issues in respect of the private rented sector from the perspective of landlords and also from the perspective of tenants.  ”

RLA vice chair Chris Town added: “The RLA has been asking members to meet their MPs and we are delighted to share with Dame Rosie first hand experiences of the changes already being seen on the ground as a result of this unfair tax grab.

“The changes to mortgage interest relief are not just a landlord issue they are very much a tenant issue as well.

“Experts have warned rents would need to increase by between 20-30% for landlords to offset the impact.

“As Teresa has seen first-hand, landlords are already selling up ahead of the tax changes and tenants are already being affected. We hope Dame Rosie will take this opportunity to share our concerns with the government.”

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About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

3 Comments

  • I don’t know how Tory MPs can sleep at night having voted for this change having been told the massive amount of misery to the poorest in our society that this will cause.

    Shame on Dame Winterton and all the other spineless MPs just toeing the party line.

  • Not heard anyone comment yet but the tax changes have a much more sinister edge. That edge is interest rates. When interest rates inevitably rise, so will the tax burden. It’s also not a level playing field. Those with the lowest margins i.e. with the highest loan to values pay higher levels of interest than those with lower LTVs and so will pay higher levels of tax. Double whammy. There have been many absurd tax regimes in the past but this one defies all logic, is poorly thought out and will have a devastating effect on the private rental sector and the economy as a whole. If investors are bailing out now, what will it look like if the interest rates increase by 1, 2 or 3%? There is a reason that similar tax rules have been abolished in Ireland!

    My first professional entry into the private rental sector (PRS) saw us spend about £16,500 in builders wages, £8,000 in fees and £30,000 on materials, goods and furniture. All these boost the economy and are taxable streams for HMRC. Does the government really want me to stop doing this 3-4 times per year and lose around £50,000 tax revenue from every property investor like me? Really? Short sighted, idiotic and a disaster for the PRS! Unbelievable.

    Last year Ireland reversed their restriction on allowable interest relief from 75% to 100% (over 5 years) to rescue the public finances” and that a housing crisis in Ireland made now an “appropriate time” to revisit it” The Irish view is that it will help their housing crisis. Their restriction in interest relief was equivalent to the first phase of relief restriction coming in April this year and they think that at this level it is a problem for the housing market. What effect will it have on our PRS when the restriction come in full in 2020? My view is that it will be on its knees well before then. Basically the government is scapegoating the private landlord for fulfilling a housing need that they have neglected in successive governments – housing stock. The PRS is part of the housing shortage solution and demand will increase in the future. It should be encouraged by the government, not penalised.

    • Trouble is Paddy that most MPs just don’t understand S24. It is a devious tax sold to Parliament using extreme sophistry. By the time it’s full impact is felt, those responsible will have all moved on, more than likely lining their pockets from some other poor mug. Ozzy has already been booted out …. earning £650k p/a for just one day a week!!!

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