The Budget June 2015 – What does this mean for Landlords and Tenants?
There is a common misconception that buy-to-let landlords have it easy and tenants have it tough.
With tenants gaining more and more rights and it becoming increasingly difficult for landlords to recover possession of their property, this is far from true.
Yesterday’s budget threw up a few surprises for landlords. Below is a summary of these.
Tax relief on mortgage interest payments
Buy-to-let landlords now face cuts in the amount of tax relief they can claim on mortgage interest payments.
The present position allows landlords to claim tax relief on their monthly interest repayments. However, the changes being introduced will mean that landlords will only be able to claim the basic rate of tax which is currently 20%. This will affect landlords financial. However, a slight saving grace is that these changes are being phased in over a period of 4 years starting in April 2017.
So what could this mean for the rental market?
The changes could affect the supply of rental properties making it harder for people to rent. In addition to this, landlords may increase rent putting properties out of reach for some tenants.
Mr Osborne stated that this change could be a “huge advantage in the market”. However, if rents are increased or fewer properties are available for rent it could be tenants that ultimately suffer.
In addition to the above change further changes were announced:
Increase in the level of Rent-a-Room Relief
With effect from April 2016, Rent-a-Room Relief will increase from £4,250.00 to £7,500.00.
Reform of the Wear and Tear Allowance
The current Wear and Tear Allowance will be replaced in April 2016 by a new relief allowing all residential landlords to deduct the actual costs of replacing furnishings.
These are interesting times for the rental sector and it will be interesting to see how these changes will affect the market. Time will tell.