The Government’s impact assessment of budget measures to restrict mortgage interest relief to the basic rate for landlords is being questioned by the Residential Landlords Association and the Scottish Association of Landlords.
The measures announced in today’s budget create damaging uncertainty for the private rented sector and will leave tenants facing increased rents, claim the landlords’ representatives.
HM Revenue and Customs’ impact assessment refers to the proportion of individual landlords that will receive less relief as a result of this measure. This misses the point that it is not the landlords but the number of properties affected that matters most. According to HMRC 20 per cent of landlords will be affected but many of these, if not most, will have more than one property with an interest charge against each.
The RLA and SAL are pointing to an assessment by PWC which has warned that the measure: “could see buy-to-let investors feeling the squeeze and putting up rents”, which, it notes, “would have a major impact” on tenants.
Commenting following the Chancellor’s statement, RLA Chairman, Alan Ward said:
“The RLA will look in detail at the Government’s measures, but on the face of it the impact could be to push up rents as landlords have to recover their extra costs.
“With many contradicting assessments of the number of private rented properties and the number of landlords, HMRC’s impact assessment is scant on detail. The reality is that this measure will hit many more tenants than landlords.
“We urge the Government to hit the pause button on these proposals and undertake a comprehensive and open consultation and assessment of what its measures will mean.”
- HM Revenue and Customs’ impact assessment can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443277/6041_Restricting_finance_cost_relief_for_individual_landlords__3_.pdf .
- Robert Walker, PwC real estate partner has said of the measure:
“Today’s changes do nothing to address the fundamental lack of supply in the UK housing market and ultimately may backfire and hit people who are having to rent.
“We could see buy-to-let investors feeling the squeeze and putting up rents. This would have a major impact on Generation Rent.
“Moreover, if interest rates increase over the coming years, and rental yields don’t keep pace, investors could be paying tax on a loss.”