Raised income tax thresholds could allow some landlords to borrow more, according to mortgage experts.
They welcomed the chancellor’s announcement in the Autumn Budget that the higher rate income tax threshold will be raised to £50,000 in April 2019, a year earlier than planned.
Specialist buy-to-let broker Commercial Trust says this was “positive news” for many borrowers, particularly after a raft or regulatory changes than have hit profit margins for buy-to-let investors.
Commercial Trust chief executive Andrew Turner says: “There was very little mention of landlords at all. Perhaps the most significant aspect of this Budget was the raising of the personal income tax allowances for basic and higher rate tax.
“This could represent some good news for landlords who are borderline higher rate taxpayers at the present threshold of £46,351.”
He says if these landlords find themselves in the lower tax bracket from April next year they should benefit from more generous borrowing calculations on certain buy-to-let products.
“This is because some lenders apply less strenuous rates in their income calculation ratio assessments for non-tax payers and basic-rate taxpayers.”
He says this could enable some formerly higher-rate taxpayers to borrow more on selected products after April.