Chancellor George Osborne has been warned that rents in the private rented sector could rise if he scraps the tax-deductible status of mortgage interest payments in today’s emergency Budget.
In a letter to the Chancellor, the National Landlord Association’s chief executive officer Richard Lambert says that making mortgage interest payments non tax-deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing.
The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax.
“It has been suggested that private landlords receive too many ‘perks’ or reliefs which give them an unfair advantage compared to owner-occupiers, but this ignores the fact that letting residential property for profit is a business” says Lambert.
“No business pays tax on their gross turnover alone so why should landlords be treated any differently? Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others” he claims.
Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the private rented sector could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible - a move it warns would leave landlords with no other option than to raise rents.
Lambert concludes the letter by seeking…“an unequivocal reassurance that the Government will continue to regard buy-to-let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future”.
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