Most landlords want Government to scrap tax changes: Paragon

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Most landlords want the Government to reverse the changes to tax relief on buy-to-let mortgage interest, according to Paragon Mortgages.

The lender’s latest PRS Trends Report asked landlords what single Government action would help their business, and reversing the income tax changes topped the list.

The second ranked answer was for no more Government interference in buy-to-let, following a series of changes.

The third most popular action landlords wanted from politicians is an exemption from capital gains tax and Stamp Duty for landlords moving properties into a limited company structure.

Eleven per cent of landlords reported having set up these structures in Q2 2017.

Other commonly reported actions taken by landlords in Q2 were to increase rent (20 per cent of landlords), sell property and buy no more (20 per cent), or repay some or all of the mortgage (18 per cent).

More landlords now understand the personal implications of the tax changes in Q2. Eighty-eight per cent said they were informed, up from 71 per cent six months ago.

Paragon Mortgages managing director John Heron says: “Having taken active steps in preparing for a difficult period of transition as the tax relief changes continue to be phased in, landlords are now facing up to the challenge ahead.

“Higher tax charges for landlords have combined with a general increase in uncertainty to drive confidence levels down.

“However, whilst there are signs of lower demand it would appear that property yields are being maintained and that void periods are close to historic lows.”

The tax changes were announced in the 2015 Summer Budget by former chancellor George Osborne and will be phased in over three years from April 2017.

Higher-rate taxpayers will no longer be able to offset all their mortgage interest against rental income before calculating the tax due.

The Paragon report is based on interviews with 201 residential landlords.