Many landlords still confused by tax changes as year end looms


Landlords face problems at the end of this tax year if they have not taken on board mortgage interest tax changes unveiled in 2015, according to Kent Reliance.

The 2015 Budget announced three separate reductions to the tax relief on mortgage interest payments.

The first came into effect in April 2017, meaning landlords will only be able to claim back 75 per cent of finance costs when they file their returns ahead of January 2019.

By April 2020, landlords will no longer be able to deduct any of their mortgage expenses from their rental income when calculating their tax obligations.

Landlords can move properties into limited companies or put them in the names of spouses to get around the new rates.

However, Kent Reliance research suggests that only one in five landlords have done either.

Only a further one in six (13 per cent) plan to do so in the future.

The lender adds that 15 per cent of landlords do not understand the changes enough to value taking any sort of action.

A Kent Reliance statement says these landlords “could be in for a rude awakening when they file taxes for the year 2017/18”.

Small and large-scale landlords are split on the decision to incorporate.

Fifty-eight per cent of those with one to five properties in their portfolios,do not think they would benefit from changing to a limited company or transferring ownership.

This figure drops to 27 per cent for larger professional landlords with more than 20 properties in their portfolios, well below the average of 53 per cent for all landlords.

OneSavings Bank sales and marketing director Adrian Moloney says: ““Landlords have had nearly three years to understand and prepare for the changes to the tax treatment of mortgage interest. Most have risen to the challenge, but a few might have quite the shock when they come to file this year’s tax return.

“As the tax year draws to a close, brokers can use this opportunity to engage with their clients, make sure they’re aware of the potential impact on their finances.

“Many landlords have sought to move to a limited company structure, or transferred ownership to a spouse but it’s not a one-size-fits-all solution so it’s vital that landlords affected seek professional tax advice.”


Furness BS added to Buy to Let Club panel

Buy to Let Club has added Furness Building Society to its panel of lenders. The club points out that Furness is viewed as a flexible lender by intermediaries, because of the way it focuses on affordability when assessing buy-to-let cases. Buy to Let Club managing director Ying Tan says the “flexible and individual approach” to […]


Newbury reduces buy-to-let rates

Newbury Building Society has cuts the rates on its buy-to-let mortgage range, including its products for limited companies. Rates have been cut by up to 0.25 percentage points. As a result of these  changes, Newbury BS is now offering a limited company buy-to-let deal at 2.99 per cent (down from 3.2 per cent). It is […]


Buy-to-let rates rising: Mortgage Brain

The cost of mainstream buy-to-let mortgages is beginning to rise, according to data from Mortgage Brain. The sourcing system says it has seen a number of cost increases over the past three months. It says this is due to interest rate rises and PRA underwriting changes beginning to take effect. The cost of a two-year […]


News and expert analysis straight to your inbox

Sign up