62% of the UK’s landlord population are single property landlords which is around 1.5 million of the estimated 2.3 million landlords. However, due to the introduction of new tax rules for buy-to-let landlords, they will be pushed into the higher income tax bracket according to the National Landlords Association (NLA).
Currently, the average annual mortgage finance costs for a single property landlord stands at £5,600 but when the tax changes are fully implemented by 2021, landlords’ mortgage finance costs will count towards their taxable profit. Therefore, single property landlords who are earning just below the upper income threshold of £45,000 could possibly moved into the higher bracket of 40%.
This means that the landlords would have to increase their rent of at least £116 per calendar month in order to consistently earn a steady profit from their property. This also means that the landlord’s ability to continue to provide good quality housing could deteriorate.
Families and young couples who are renting their homes from the private rented sector are also most likely to suffer as a result of these new changes as affected landlords will either have the choice of increasing rents or selling up their rental property.
If you have any queries or want to know more about property tax, please call 01772 788200 or email at info@taxexpert.co.uk