Government tax raid on homeowners hits investment levels hard


The series of government tax changes have hit homeowners’ investment plans, with 52% dissuaded from buying more properties, according to a new survey.

A LSE A study for the National Residential Landlords Association (NRLA) found that despite the seismic impact of Covid, the tax changes affected their plans more than the pandemic.

His survey of over 1,400 private landlords across England found increasing regulation and bureaucracy as well as negative government messages about private landlords and their role in the housing market had also played a role.

The owners felt vilified and attacked by the government and, according to the report, “the emotional tenor of many of the comments and the near unanimity of views were striking.”

Recent changes include limiting the mortgage interest exemption to the basic income tax rate, a 3% stamp duty on the purchase of additional housing, and a decision to reduce income tax. capital gains at 18% for anything other than gains from the sale of home ownership.

Greater effect

Overall, a third of those surveyed said the mortgage interest relief reform was the tax change that had the most effect on their rental business. Of that group, 39% said the change meant they were not moving forward with planned future purchases while 31% had put their plans on hold and 28% were taking steps to exit the industry altogether.

Another 60 former owners said their main reasons for leaving the industry were rising costs, tax changes and potential regulatory changes.

The study authors individually and cumulatively stated that recent changes have reduced the incentive to own a home in England.

The addition: “These indications could herald the start of a contraction in the sector, unless the economic environment changes. The divestment will likely be led by the economically motivated owners most affected by the recent changes.

“This includes the highly leveraged individual investors who are higher and additional rate taxpayers because they can no longer deduct mortgage interest at their marginal tax rates. “

Read more on stamp duty.


About Author

Comments are closed.