Finance and Taxation Reform

One in four landlords selling up due to MIR changes

Autumn Statement
Sally Walmsley
Written by Sally Walmsley

A week ahead of the Autumn Statement the RLA can reveal that a quarter of all buy-to-let landlords are selling homes as a result of Government tax changes.

An RLA survey of more than 1,000 landlords showed that a quarter had either sold one of their properties or had one on the market as a result of the Government’s plans to change Mortgage Interest Relief, to tax them on income rather than profit.

This means many landlords on the basic rate of income tax will find themselves pushed into a higher rate despite their income not having increased.

It is tenants who are likely to lose out as a result of the changes, either losing their homes as landlords sell up or facing higher rents as landlords try to mitigate the financial impact and supply is reduced.

The RLA is making a final call for Chancellor Philip Hammond to reverse the decision on November 23rd.

David Smith, RLA policy director said: “The RLA’s findings are a worrying sign of the potential trouble ahead for tenants as a result of the previous Chancellor’s tax rises.

“Any reduction in supply is going to make it more difficult for them to find a place to live and will inevitably drive rents up.

“Ahead of the Autumn Statement we are calling on the new Chancellor to consider the evidence, reverse policy and support growth in the rented sector.”

RLA research showed 68% of landlords said the changes will reduce their profitability by at least 20%, and 14% said it will reduce profits by more than 60%. A total of 36% said the removal of MIR would result in them making a loss on their investment.

The plans, which were announced by former chancellor George Osborne in 2015 are set to be phased from next year.

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.

1 Comment

  • I’ve also just heard about the new stress tests for landlords coming in January via the Prudential regulator. I must say it’s not looking very good for the start up BTL landlord. Rumours are that it could be as much as 200% rental over mortgage.
    I think it also means that despite the campaigns by the various Landlords associations, it is now very unlikely that the government will repeal the MIR legislation, I don’t think they’ll even try to water it down.

    What is the government trying to do?
    I hope they’ve worked what to do with the fallout of this policy, not only does it seek to get rid of the smalltime and accidental landlord and supposedly the rogue. It is going to drive rents through the roof and supply of available property through the floor.
    As most landlords and small investors are still unaware of the full impact it will have on their livelihoods, some have buried their heads in the sand, and others still live in hope that the chancellor will have a change of heart.  I think the fall out is still a little way off and that 2020 could be the year that it all blows up for the private rented sector. 
    And possibly the worst thing of all is: Will the local authorities be able to keep pace with rental demands in respect of Housing benefit claims???? 

    I also think that Rent Smart [Wales] will be extended into England within the next few years and will act as a further deterrent.

    I hope that I’m wrong for everyone’s sake

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