11:40 AM, 27th July 2015, About 6 years ago 4
65% of landlords are considering increasing rents following the Budget announcement, according to research by the Residential Landlords Association (RLA).
New research reveals that increasing rents are a real possibility, despite the Government having made an argument that rents would not increase as a result of changes to how landlords are being taxed.
HM Revenue and Customs had made the judgment that proposed measures would not have a significant impact on rent levels.
The changes announced included the restriction of Mortgage Interest Relief for residential landlords to the basic rate of income tax.
In addition, landlords will now not be automatically entitled to a wear and tear allowance for their properties, which will leave them with no compensation for general wear and tear of a property.
A spokesperson for Property 118 Landlord Insurance partner Discount Insurance said: “Landlords are taxed on rental income and capital gains, so they have not been taxed more favourably in the past compared to home owners.
“With the Budget changes that have been announced, it is of greater importance that landlords protect their income and avoid further expenses by getting specialist landlord insurance,” added the spokesperson.
The RLA has warned that the assumptions made by the Budget regarding rents not increasing are wrong. The Institute for Fiscal Studies and Policy Exchange have also made similar warnings.
Commenting on the revelations, Alan Ward, Chairman of the Residential Landlords Association, said: “Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, the Finance Bill will choke off supply and drive up rents.”
“The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different. It’s time the Treasury recognised residential landlords as a business,” added Mr Ward.
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