Tax breaks for landlords should be reinstated to stem the flow of sales, NRLA says

Buy-to-let body calls for tax breaks for landlords to stem the flow of sales and ease the rental supply crisis

  • Reintroduction of the mortgage interest deduction could alleviate the rental crisis
  • This tax reduction was replaced by a less generous system
  • It’s one of the factors that contributed to landlord sales



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According to the National Residential Landlords Association, scrapping a tax increase on private rental properties could help alleviate the rental crisis.

Fully restoring mortgage interest deductions for the private rented sector could help ease the sector’s supply crisis, according to research by Capital Economics commissioned by the NRLA.

The mortgage interest deduction allowed landlords to deduct the mortgage interest from their rental income when submitting their tax return.

But this was phased out between 2017 and 2021 and replaced by a much less generous system of tax credits.

Under the tax credit system, landlords instead get a 20 percent tax credit on mortgage interest payments.

Mass exodus?  The phasing out of the mortgage interest deduction has been a reason for many landlords to sell

Mass exodus? The phasing out of the mortgage interest deduction has been a reason for many landlords to sell

The inquiry comes amid a supply crisis that continues to cause pain for tenants across the UK desperate for a place to live.

Changes in mortgage interest deductions have been a factor in many landlords’ decision to sell their properties because of higher mortgage rates.

According to the study, the reintroduction of mortgage interest deduction would mean that 110,000 fewer homes would be lost on the private rental market.

If the Bank of England’s base rate were to peak at 5 percent and remain above 2.5 percent until the end of 2027, as many have predicted, up to 735,000 private rental homes could be lost in the UK compared to 2021, research shows the research. suggests.

This is because interest rates have increased mortgage interest, also for landlords.

Ben Beadle, chief executive of the NRLA, said: ‘In 2015 the government said it wanted to ‘create a more level playing field between those who buy a house to let and those who buy a house to live in’.

By doing so, it increased costs for responsible landlords while totally ignoring the burden it would create for tenants.

“In the midst of an unprecedented cost-of-living crisis, the government must put economic reality before political pride and undo this caricature of reform.

Tax hikes for landlords, exacerbated by rising interest rates, have deepened the supply crisis. And as this research shows, the situation is unlikely to improve until and unless it is reversed.

“A radical rejection of these harmful policies is needed to help turn the tide of lost rental housing, limit rent increases and boost Treasury revenues.”