Buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle.
UK buy-to-let landlords will still benefit from £16.7bn worth of tax relief after the government’s changes to the system are fully implemented by 2020, analysis by London estate agent ludlowthompson shows.
The taxreliefallows buy-to-let property landlords to offset against their rental income expenses like mortgage interest and other costs including property repairs, maintenance and renewals,legal costs, management and professional fees; and rates, insurance and ground rents.
Stephen Ludlow, chairman at ludlowthompson, said: “Despite tightening, buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle.
“Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”
The Treasury said it expects the amount of taxes it collects from landlords to rise by£840ma year by 2020-21 after its cuts in tax reliefs on interest payments and property maintenance.
Government data showed landlords claimed £17.5bn in property expenses in the last year.
Landlords claimed over £7bn in tax relief on mortgage interest and other financial costs, while£3.7bnwas claimed for property repairs and maintenance.
After planned changes to tax relief are fully implemented, landlords will still be able to claim approximately £6.4bn on interest rate costs alone.
Ludlow added: “Labour mobility continues to be central to economic strength. However, if cities like London are to remain a magnet for home-grown and international talent, sustaining a vibrant, high quality rental market is essential.
“To do that, the system has to work well for both tenants and landlords.”
