Will Post-Budget Rents Rise?

The budget delivered many surprises, but the biggest for landlords was the restriction of mortgage interest rate relief and the removal of the wear and tear allowance for anything other than provable expenditure.

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Budget Changes
Mortgage interest relief will be gradually lowered until it sits at the basic rate of tax, which is currently 20%. So higher-rate taxpayers, which bigger landlords generally are, will be affected. The wear and tear allowance was previously 10% of a landlord’s annual profit, but not any more.

RLA Landlord Survey
A fresh survey conducted by the Residential Landlords Association has found that 65% of landlords are thinking about raising rents to cover their extra costs, which directly undermines an HMRC assessment that the Chancellor’s changes would have no significant effect on rent levels. George Osborne justified the changes by saying landlords were treated more favourably than homeowners, but the Institute for Fiscal Studies have said this is incorrect.

According to Alan Ward from the Residential Landlords Association:

“The reality is that the Chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct. Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.”

“The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different. It’s time the Treasury recognised residential landlords as a business.”

Are you raising rents? Let us know in the comments!