The Budget is unlikely to hold good news for buy to let landlords and according to experts the best they can hope for is no more change.

Chancellor Philip Hammond has already indicated that he will boost new home building and the property industry has lobbied him to introduce some kind of change in stamp duty.

Landlords would like to see a reversal of the extra 3% stamp duty on additional properties but this is unlikely and they will be

According to John Goodall, chief executive officer of buy to let specialist Landbay, the Chancellor should not overlook the private rented sector in his bid to fix the broken housing market. ‘It is vital that the sector remains attractive to landlords, and complex costs and taxes will disincentivise landlords from engaging in the market,’ he said.

‘A fall in quality and volume of rental accommodation would hit those that the Budget is trying to help hardest. Renters and potential first time buyers would take the brunt of the costs, actively working against any goals of intergenerational fairness that Hammond claims to have. More widely, this would damage the UK housing and construction markets at a time where the UK economy can’t really afford the hit,’ he explained.

Rebecca Wilkinson, corporate tax director and property sector specialist at accountancy firm, Menzies LLP, believes that after a series of hard hitting changes affecting buy to let landlords, the best that they can realistically hope for is no further changes.

In the current tax year, smaller scale landlords have seen the introduction of a new cash basis of accounting and the commencement of the new interest restriction rules, which both affect the way rental profits are calculated.

‘Whilst many landlords are still hoping for a U-turn on the interest restriction rules, which are likely to result in large tax increases, this seems unlikely and the best that property investors can realistically hope for is a respite from further changes, whilst everyone gets to grip with the new regime,’ said Wilkinson.

She pointed out that the fact that the new interest restriction rules only apply to individual landlords, coupled with the current low rate of corporation tax, has led many buy to let investors to transfer their property portfolios to companies over the last year. With rising inflation likely to put pressure on public finances, the Government may seek to raise taxes in some areas and it is feared that this could lead to the introduction of a higher corporation tax rate for investment companies.

‘The raising of corporate tax rates for investment companies would be a nasty sting for any landlord that has recently incorporated their buy to let business. Whilst corporate landlords may be an easy target for tax increases, and they have been targeted in this way previously, the property rental sector has already been disproportionately affected by changes to tax legislation in recent years and now needs time to come to terms with them,’ she added.

The private rented sector in general and the buy to let market in particular must be no-go-zones for the Chancellor when it comes to raising revenues to solve the UK housing crisis, according to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA).

‘The private rental sector is already in danger of wilting under sustained pressure of government action, and the market is still in a state of flux due to the raft of regulatory changes imposed over the last two years,’ he said.

‘Far reaching policies to reduce mortgage interest tax relief and raise stamp duty charges, at the same time as tightening underwriting criteria, are still new, and their effects have yet to fully bed in. The buy to let slowdown has already started and is forecast to continue, reducing further investment and portfolio expansion,’ he added.


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