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.”