There will be a tax grab on landlords under Section 24 unless MP’s stop it and this will lead to increases in rents according to landlords.
The Government is looking to place a tax on the income of landlords as opposed to taxing after allowances including the loss of mortgage interest relief. This will result in a likely increase in rents and tenants will have to bear the burden of these tax changes.
If this legislation goes through Parliament it will mean that landlords will experience much higher tax bills and will severely affect their profits. Couple this with the supply of rental homes falling and landlords facing steeper overheads, a rise in rents will have to take place to make up for the additional costs.
High Proportion Of Landlords Will Have To Increase Rents
A survey was conducted by the Residential Landlords Association (RLC) and 84% of those surveyed confirmed that they would have to increase rents following the tax increases. The 3% surcharge on stamp duty for the purchase of homes for rent was one of these taxes.
As a result of this the RLA is campaigning for more sensible changes to this Finance Bill so that tenants and landlords can be protected. The RLA wants the mortgage interest relief change scrapped as well as the additional stamp duty tax so that landlords can continue to buy new properties to cater to the demands of the rental market.
Some Backbench MP’s Opposed To The Changes
Private rental sector landlords are likely to be the hardest hit with these tax changes and the Government really needs these landlords at this time. It is a concern shared by a number of backbench MP’s who have voiced their concerns over this “crackdown” on private landlords and their finances.
The view of the backbenchers is that private landlords do not want to increase rents but they will be forced to do this so that they can stay in business. At the end of the day it will be the tenants who will suffer. Some will just have to pay more, while others who cannot afford the new rents will have difficulty finding a suitable place to rent.
Hidden Dangers Of Section 24
There are some other issues about Section 24 that you may not be aware of and this video explains the hidden dangers that are lurking: