Budget proposals will hit landlords
Wed 15 Jul 2015
The latest budget will introduce two important changes which will affect private landlords.
Mortgage interest relief for private landlords will be restricted to the basic rate of income tax. This will effectively double the cost of borrowing for those landlords paying the highest rate of tax. However the change will be phased in over several years. In 2017-18 landlords will only be able to apply the existing relief rules to 75% of their finance costs, with the remaining 25% using the basic rate reduction. The following three years will see the proportion change to 50:50, and then to 25:75, before the basic rate applies in full from 2020-21.
In addition landlords will no longer be able to automatically deduct 10% as a wear and tear allowance for their furnished properties. Instead they will only be able to deduct from their tax bill the costs that they actually incur.
At the moment landlords of furnished properties can deduct 10% of their rent from their profit to account for wear ant tear, whether they have incurred the expenditure or not.
It is important for landlords to start planning for the changes now and seek professional advice where required.
January 2015View older stories >
Instant Online Valuation
Interested in your property value?