On the 8th of July, George Osborne announced the new Budget, and it spelt a big change in the fortunes of buy-to-let landlords. In what the Chancellor explained as a move to “level the playing field for homebuyers and investors”, tax relief on mortgage payments for landlords has been significantly cut: where previously a landlord could claim a 45% tax rate, they will now be limited to the basic rate of 20%.
The Government will be phasing this new plan into effect over a four-year period from April 2017. These changes will hit the profits of all buy-to-let landlords, from persons with a single property to companies managing multiple large-scale portfolios. There is growing concern that this will have negative repercussions for tenants, whose rent may be markedly increased to compensate for the losses landlords will suffer on account of the new budget.
However, there is some benefit to be seen from Osborne’s new proposal: first time buyers will no longer have to compete as fiercely in the market with landlords looking to buy-to-let, who have accounted for a massive 15% of all mortgages taken out so far in 2015. If this happens, the demand for properties may stop so seriously outweighing supply, which can spell only good things for the prices first time buyers will have to pay.
For more information on the new Budget’s restrictions for landlords, visit the BBC. If you are interested in buying properties to let, or buying a first time home and have any questions or are looking for a real estate service, get in touch with Autograph Estate Agents today.