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More than two thirds of landlords say that changes to buy-to-let mortgage tax relief will lead to increased rents, according to a survey conducted by The Deposit Protection Service (The DPS).
In July, George Osborne, The Chancellor of the Exchequer, announced that the government would reduce the amount of tax relief available for interest on buy-to-let mortgages.
Of the 4,480 landlords who responded to a recent survey issued by The DPS, 68.51% said that they believed that the changes would lead to increased rents, with more than a third saying they are considering leaving the rental market or selling their property as a result of buy-to-let mortgage relief changes (35.10%).
Julian Foster, Managing Director at The DPS, said: “Many landlords are currently facing a double-whammy of tax changes that could lead to increased rents for tenants –forcing them to sell or leave the rental market.
“Many landlords are small businessmen and women or ‘accidental’ landlords, and taxation increases can affect their livelihoods and financial wellbeing.
“With many commentators predicting an interest rate rise next year, landlords are facing a series of financial challenges over the next few years.”
Any future interest rate rise is likely to have financial consequences for landlords with mortgages, and 32.79% of respondents to The DPS’ survey said that they intend to pass on the costs of any interest rate rises to tenants.
Almost two thirds of respondents also said that they would be worse off over changes to wear and tear tax relief (62.34%).
From April 2016, an ‘automatic’ 10% tax break for wear and tear at a property will be replaced with tax deductions covering the actual cost of replacing or repairing its contents.
26.47% of respondents said that they will redecorate or replace furnishings less often as a result of the changes.
As part of tenancy agreements, landlords and letting agents typically take a deposit from tenants to guard against loss and damage, and by law must protect the money through an authorised tenancy deposit protection scheme such as The DPS, the UK’s largest.
The DPS recently retained their government contract for a custodial tenancy deposit scheme following a competitive tender.
If a tenant does not agree with the landlord’s deductions, The DPS offers an independent, free Alternative Dispute Resolution service, which aims to resolve any disputes quickly and without the need for court action.
The DPS aims to repay all deposits within two business days, on receipt of a jointly authenticated repayment instruction.
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